EUR/USD: U-Shaped: Themes, Targets, & Tech Setup – BofA Merrill
Themes: Trump-driven in H1, Draghi-driven in H2
It is all about the USD for now. We expect US fiscal stimulus, which together with political risks in Europe should help weaken the EUR in H1. Although we remain positive on France, investors will hedge the French elections following Brexit and Trump surprise wins. We expect ECB constraints to become a more important driver and strengthen the EUR in H2. The market took the reduction of the ECB QE monthly purchases last December well, but this was the beginning of the end for QE, in our view.
