TD Research discusses EUR/USD outlook and adopts a neutral bias on a medium-term basis.

"The central banks have a narrow mandate to protect inflation and any whiff of lost confidence in their toolbox would undermine their credibility. As a result, they will push ahead whether necessary or reasonable. The Fed comes on the heels of a multi-pronged easing package by the ECB. Draghi's swan song increases the scope for fiscal support, given the ECB will continue to cap increases in sovereign yields. Our LFFV models anchor EURUSD in the low 1.20s and we still like it above forwards on a rolling 6m and 12m basis. However, a German led fiscal boost requires more pain to play, suggesting the EUR remains sidelined over the coming months," TD adds.