Bank of America Merrill Lynch - "we continue to expect the euro to weaken. The recently hawkish ECB language is not justified by the data, in our view. Statements by Eurozone authorities that the euro is too strong reflect concerns that unfair competition could affect the recovery prospects (see Why is Germany concerned about a currency war?). Markets seem complacent about the challenges in the periphery’s adjustment. And we still believe markets underestimate the negative impact on US growth and global risk appetite of the US fiscal tightening this year.
(...) Taking into consideration the recent market trends, we have increased our EURUSD projections and kept a bearish euro path. We now project the pair at 1.30 at the end of Q1, from 1.27 before, and at 1.25 at the end of the year, from 1.22 before. We had pointed out late last year that the timing of the euro weakening was a risk to our projections, and this risk has materialized. However, the fundamental reasons for our bearish euro outlook remain, so we continue to expect it to weaken during the year."