EUR/USD: Deutsche Bank explains 3 reasons why pair should fall to parity by the end of the year

In a note published today, Deutsche Bank lists the 3 reasons that justify why it is maintaining its bearish outlook in the medium term on the EUR/USD:

"First, despite rather dovish recent statements by the Fed, the effective rate differential between Europe and the United States does not report a significant difference between rate expectations and the evolution of the forex. We do not agree with the market, which thinks that the Fed will stay on the sidelines for now, and we expect 1-2 rate hikes are still possible this year.

Secondly, Eurozone outflows remain at a very high level, and few things suggest that this may change.

Lastly, we believe that the USD's upward trend in the medium isn't over. The recent correction of the dollar is not unusual in the history of medium-term cycles, and the higher US rates we anticipate should help the greenback to continue its progression.

In the end, we therefore continue to expect a fall to parity by the end of the year."