EUR/USD: Deutsche Bank increasingly confident of its target of a drop well below parity in 2017

In an analytical note published over the weekend, Deutsche Bank explains why it is more and more confident about its goal of a fall of the euro to parity with the dollar.

"We feel increasingly confident in our forecast that the EUR/USD will break under the 1.05-1.15 range in the direction of parity next year.

First, it was time for the euro to move again. Indeed, the length of the last period without a specific trend has broken a record.

Then, a rise in Fed rates in December would place the dollar in 3rd position of the highest G10 yields, a positive factor for the USD.

Lastly, the topic of divergence is resurfacing, with risks of growth and interest rates rising in the US, and declining in the Eurozone.

We therefore continue to expect a EUR/USD decline to 1.00 by the end of Q2 2017, then to 0.98 at the end of Q3 2017, and down to 0.95 at the end of 2017."