Economists at Deutsche Bank believe that the US dollar is set to enjoy a more favourable environment by the end of 2021. Therefore, they have lowered EUR/USD year-end forecast to 1.16. 

European basic balance very weak

“We modestly upgraded our dollar forecasts for year-end: persistently stagflationary dynamics – lower growth but higher inflation expectations and a hawkish Fed bias – leave little room for a dollar downtrend.”

“In Europe, there has been a huge decline in real yields on the back of persistent ECB dovishness. The European inflow story has also proven a disappointment. Hence, we have a lower year-end EUR/USD forecast of 1.16 with downside risks.”