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
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