An outlook for the euro from Barclays' quarterly strategy

In summary, any bolding is mine:

  • We continue to believe that the conditions for a EUR breakout are not yet met
  • The current move likely is an extension of and shift higher in the range due to a decline in perceived euro area risks and the prospective removal of 'insurance' monetary policy
  • The USD remains about 9-12% overvalued and consistent with a cyclical peak, but it is 8% off its recent peak and extended horizon range trading is typical at inflection points
  • Measures of returns to capital suggest a narrowing of the US advantage and pickup in Europe, but the shift to EUR leadership has not yet happened
  • The ECB's and Fed's respective measures of spare capacity suggest that the euro area's output gap should continue to act as a drag on returns to capital throughout our forecast horizon, as well as provide a sustained carry advantage for the USD in both nominal and real terms. We expect the USD's already significant policy rate advantage to increase over our forecast horizon, as the Fed steadily tightens policy amid building capacity pressures, while the ECB retains some QE and negative nominal rates throughout our forecast horizon

More:

  • Our own proprietary client flow shows a mixed picture by investor segment in positioning, as leveraged clients have moved to a sizeable net short in EURUSD. There has been a significant reduction in actual and perceived risks in the euro area.

And, finally:

  • Risks to the EU from the Politics of Rage have not diminished in the long term. Refugee inflows continue to be a threat to unity
  • Long-run debt sustainability remains an issue for some periphery countries
  • Brexit, too, is a risk as the UK is a key trading and financing partner for the EU
  • For the US fiscal policy, the risk/reward now appears inverted from the start of this year when markets priced in too great a chance of a large tax cut package.