Euro’s support now looks set to last

While US interest rate expectations for this year have risen into line with our own, this has not undermined the euro as we had anticipated. Instead, markets have focused on the strength of the euro-zone economy and perhaps the possibility that the US business cycle is nearing a peak. Since we expect these forces to remain in place, we now see the euro appreciating to $1.25 this year and $1.30 in 2019.