EUR/USD to Hit 1.05 Argue Deutsche Bank
- Written by: Gary Howes
Content provided by eFXnews.
George Saravelos, Strategist at Deutsche Bank, writes:
Recent developments in EUR/USD point to a renewed deterioration in fundamentals across our two most important guiding frameworks – flows and real rates.
On the flow side, the basic balance - the sum of the current account, FDI and portfolio flows - remained negative but stable throughout last year as large portfolio outflows offset the current account.
Flows have recently taken a turn for the worse however, this time driven by foreign direct investment (FDI) outflows.
- Related: Why Euro Exchange Rate Strength is Unsustainable: The Scotiabank and Deutsche Bank View
- Deutsche in Another Euro / Dollar Forecast Upgrade, But Stand by Euroglut Theory and Expect Declines
European appetite for foreign companies is picking up, and a similar message is given by our more forward-looking cross-border M&A monitor.
The basic balance is now at its weakest post-crisis levels pointing to a EUR/USD break below 1.05 based on previous relationships.