EUR/USD: Range view holds as Dollar doubts grow – Deutsche Bank

Deutsche Bank argues EUR/USD is likely to hold within its 1.13–1.20 yearly range rather than break lower, pushing back against consensus Dollar bullishness. The bank cites resilient global growth, peak USD yield support and an energy shock that looks increasingly priced. Its FX Blueprint maintains a 1.17 EUR/USD forecast for year-end, emphasizing solid global data and limited further Fed-driven Dollar upside.

Resilient growth and peak USD yields

"EUR/USD is right at the bottom of its 1.13-1.20 range of the year. Is it time to go with a break and chase the move lower or will the euro hold and stay in the range? We sit in the latter camp and don’t agree with the increasingly consensus view that the dollar is about to break out."

"Terminal Fed pricing now looks fulsome, with NY Fed President Willians overnight pushing back on consecutive rate hikes. Any additional rate rises in the US are much more likely to come from higher term premium, which historically is not supportive of an appreciating USD."

"In sum, with global growth solid, energy markets already pricing a lot of risk premium and the Fed hiking cycle very well priced, this is the wrong time to be chasing EUR/USD lower. Our FX Blueprint has a 1.17 forecast for year-end."