Deutsche Bank sees years of struggles for the euro due to politics

Deutsche Bank is out with a new set of FX forecasts and has this to say:

“We have been bullish
on the USD throughout the year on the
premise that the Fed will cut slower than other central banks and that the
dollar was under-pricing the US election. The dollar’s rally in recent days is
arguably in part due to the market finally starting to price a higher risk
premium onthis event. We have
now updated our FX
forecasts to also incorporate French
political developments. The main negative impact is on Europe’s long-term
competitiveness and strategic autonomy irrespective of who wins. We see EUR/USD
(and many other dollar pairs) staying weak below 1.10 for the next two years
and always failing to beat the forward. Our EUR/USD forecasts are highly
dependent on the US election and the extent to which an aggressive
protectionist trade policy is pursued; if this is the case, we would be likely
to revise our EUR/USD forecast closer to parity.”

Full forecasts:

This article was written by Adam Button at www.forexlive.com.