Royal Bank of Scotland - "A supportive factor for the EUR continues to be the significant improving trend in the current account balance. The surplus for the region rose to a record EUR14.8 bn in November.
The surplus reflects relatively weak economic growth driving down imports and reliance on exports to support activity; particularly in the periphery.
This poses a significant challenge for the Eurozone. At a time when many countries are pursuing policies designed to drive down their currencies, and improving or stabilising sentiment in the periphery means that capital is again tending to return to the Eurozone, or at least stop exiting, the current account surplus suggests the EUR will rise. Unless there is capital flight from the region or the central bank gets busy with more stimulative QE polices, EUR will tend to rise. Just as Japan suffered from its current account surplus and a strong JPY for much the last three decades of persistent deflationary pressure, the same fate is now falling on the EUR.
This suggests that the EUR can continue to rise until it squeezes the Eurozone economy so hard that the periphery fiscal crisis re-emerges and generates either a policy shift from the ECB and/or a return to broad capital flight from the region seen through April/July last year."