Why EUR/USD Should Fall Near Term And Rally Medium Term

Published 02/13/2017, 07:44 AM
Updated 05/14/2017, 06:45 AM
EUR/USD
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Four arguments for a lower EUR/USD:

Relative rates : bearish for EUR/USD as the Fed is slightly underpriced for 2018

European politics : EUR/USD negative but do not overestimate the impact

Potential border tax adjustments : bearish EUR/USD but the size of the impact is uncertain

Potential Homeland Investment Act (HIA) 2 : bearish EUR/USD but impact likely less than in 2005

Six arguments for a higher EUR/USD:

Valuation : EUR/USD is substantially undervalued

External balances : the EU/US CA differential is at the widest level on record US politics : Trump is not Reagan

Eurozone inflation : ECB tolerance for EUR appreciation should rise as inflation has picked up

US currency policy : the Trump administration appears more concerned about the USD than recent administrations

US money supply : draw on USD cash buffer and US debt ceiling could support EUR/USD

To read the entire report Please click on the pdf File Below

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