eFX passing along the view on the euro from Bank of Tokyo-Mitsubishi UFJ
BTMU FX Strategy Research has raised its EUR forecast as it predicts that markets are no longer concerned about European political risk following Emmanuel Macron's win in the French Presidential election.
"Light is beginning to emerge at the end of the tunnel for the euro and we're confident that it has bottomed out following the French election. European political risk is likely to go on the back burner now until the Italian elections next year," BTMU argues.
In that regard, BTMU argues that as the Eurozone experiences its strongest phase of growth since the financial crisis, improving economic factors and easing deflation risks will serve to strengthen the EUR.
In addition, BTMU also expects the European Central Bank to take steps to tighten monetary policy in June, arguing that improving growth prospects in the Eurozone no longer justify maintaining the current approach.
In line with this view, BTMU expects EUR/USD to rise over the coming months to reach 1.12 by the end of Q3 and 1.14 by the end of 2017.
EUR/USD is trading circa 1.0865 as of writing.