EUR/USD seen at 1.07 by year-end – Deutsche Bank

Economists at Deutsche Bank remain neutral on the EUR/USD.

The Fed remains the most important catalyst for a move lower in the Dollar

We remain neutral on the EUR/USD. The main reason EUR/USD has failed to break higher this year is the relative outperformance of US growth to Europe.  We see this growth divergence as having peaked with forward-looking indicators improving in Europe but deteriorating in the US. 

The Fed remains the most important catalyst for a move lower in the Dollar. While the US inflation picture is looking increasingly benign, outperformance in growth supports the USD.

We mark down our year-end forecast from 1.15 to 1.07 to reflect our neutral view.