According to their FX strategist, George Saravelos
In the note, his argument is that he sees that reflation forces in the US and Europe will result in a duel between the two currencies with Europe winning out in the end.
He argues that current dynamics in the market look very similar to the 2004 - 2006 Fed cycle (one that I pointed out here) and he says that the dollar has benefited from a big rise in portfolio inflow since the Fed taper until 2016 and inflows into the USD are now slowing down.
In that regard, he says that the dollar has not been responding to Fed hikes because it was already most priced in during the QE exit - and he says that the reaction towards the ECB tightening is far less priced in and the FX reaction is yet to come.
Saravelos also mentions that 2017 saw a pick up in European equity inflows and fixed income inflows may be coming next. "Combining that with a large current account surplus, it will be hard to fight positive European flows in 2018", Saravelos argues.
This was also the guy who called for parity in EUR/USD when Trump was elected President back in November 2016.
