UBS Wealth Management on their their USD outlook this year and where to for EUR/USD (note is date Jan 25 and comes via Bloomberg))

Have revised their EUR/USD forecast to 1.30 in the next 12 months

  • were previously at 1.25

The nine reasons from UBSWM:

  1. FX markets no longer buy into the "Trump Trade" ... combination of tax cuts, deregulation and fiscal measures hasn't given the economy the boost that traders once expected
  2. The potential for three to four Fed rate increases this year will probably result in a weaker dollar unless the terminal rate rises higher than 3.5%
  3. Tax cuts and government spending may promote short-term fiscal spending, but weaken U.S. finances in the long run, which may not be good for the USD
  4. Repatriation of corporate profits is "meaningless for the currency" because a lot of foreign earnings are already held in USD, and companies could take years to bring cash back, FX impact will be "close to zero"
  5. Stronger U.S. economic growth leads global growth, so other nations and their currencies will benefit from rising U.S. demand
  6. The dollar typically weakens during periods of strong global growth
  7. Investors are still looking for chances to unwind bullish dollar bets they built up during the 2014-2015 rally
  8. The USD's exclusive role as global reserve currency is a "myth" and the greenback has lost a lot of its appeal; many central banks have shifted reserves to a broader basket of currencies
  9. There's more upside for EUR/USD on a purchasing power parity basis, reinforced by the current account gap

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