EUR/USD: Deutsche Bank expects an upside break of the 1.05/1.15 range

Deutsche Bank has upwardly adjusted its medium-term outlook for the EUR/USD.

"After President Draghi's optimistic speech in Sintra, we are completely revising our EUR/USD outlook for the rest of the year. The overall tone isn't the fundamental factor behind the change of view, but it marks the culmination of a number of developments that have led us to change our forecasts. We now see that the risks have shifted towards an attempt to break the multiannual range at 1.05/1.15 from the top.

We now expect the EUR/USD to rise to 1.16 or above before the end of the year (previous year-end forecast: 1.03). More structurally - unless an existential eurozone crisis returns - the low of the year at 1.03 marks a mid-term trough in the EUR/USD's bearish cycle.

For now our main message is that the euro is likely to be the key vehicle by which the financial conditions in the euro area will be tightened. This might mean that like the Fed, the ECB will be unable to tighten its monetary policy as much as it thinks, but only because the EUR/USD is rising in the first place."