Deutsche Bank forex experts forecast EUR/USD at 0.85 by 2017

Deutsche Bank fx masters Robin Winkler & George Saravelos see Euro weakness continuing for years. They forecast a move below parity next year and 0.85 Euro Dollar rate by 2017.

Here are their words:
“The Euro zone has experienced a historically unprecedented shift in portfolio flows, with net fixed income outflows running at a staggering 500bn EUR over the last twelve months, the largest on record.

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These flows are mostly directed towards US bond markets and have exceeded the Eurozone’s current account surplus. They have pushed the basic balance into deficit over the past year contributing to EUR/USD weakness.

Euro-area portfolio outflows will likely remain in the driving seat for years to come as core Europe’s (mostly Germany’s) vast savings are deployed overseas, while American and Asian investors retreat from European assets… Bearish pressure on the euro from this structural adjustment is therefore likely to continue irrespective of how much easing the ECB delivers in December.

We re-iterate our forecast for continued EUR/USD weakness over the course of this decade, with a move below parity in 2016 and a terminal forecast of 85 cents by 2017.

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