Deutsche has been one of the big banks that have stayed almost uniformly bullish for the EUR/USD in the last couple of months and as the biggest player in the FX market, they are well worth listening to.
They sent out a note to their customers a little earlier recommending that, based on ECB and Fed policy, the natural play is to stay long EUR/USD for this quarter.
- They expect some upside growth surprises in the EU this quarter:
- Any aggressive QE programs from the ECB, similar to the Fed, are highly unlikely given the current structures within the EU:
- Any chance of cutting deposit rates to negative is also considered highly unlikely:
That of course doesn’t discount any nasty sell-offs on bad-news headlines but I get their drift.