2017 is drawing to a close and it’s time to look into 2018. What will be the main drivers of forex trading in the next year? Here is the view from Credit Agricole, which also has forecasts for EUR/USD.

Here is their view, courtesy of eFXnews:

Credit Agricole Research discusses the FX market outlook for 2018 and outlined 4 key themes that are expecting to drive G10 FX performances in 2018. 

“1. The intensifying global divergence FX trade, based on the diverging outlook for G10 central banks in 2018;

2. A continuing global economic recovery, which should be centred on Europe and North America still, but to a lesser degree in Asia;

3. A potential spike in risk-aversion on the back of tighter global financial conditions and rampant protectionism, which may put risk-correlated G10 FX in a vulnerable position;

4. The return of political risk in Europe and the US, which may not have a lasting negative impact on EUR, GBP and USD, however,” CACIB argues.

“We expect EUR to continue to appreciate in 2018 and 2019 on the back of persistent capital inflows into Eurozone equity portfolios and, over time, EGB markets.  Global investment portfolios being rebalanced in favour of EUR should in our view propel EUR/USD towards 1.23 in Q418 and 1.27 in Q419, CACIB projects.