keep our EUR/USD forecasts unchanged and still expect EUR/USD to
continue to trade in the ‘post-Brexit’ range of 1.10- 1.14 in coming
months. We target EUR/USD at 1.12 in 1-3M.
While we believe that there will be some slowdown in the Eurozone in
coming months, we still do not expect the ECB to cut rates. Political
uncertainty is likely to increase as the US presidential elections are
However, political uncertainty could weigh on both the EUR and the
USD and thus uncertainty is more likely to be source of increased
volatility rather than a directional risk. Longer term, we maintain our
long-held view that the undervaluation of the EUR and the wide
eurozone-US current account differential are longer-term EUR positives.
Hence, EUR/USD will reach 1.20 before it reaches 1.00, in our view. We target 1.14 in 6M and 1.18 in 12M.