Bravo for UBS!!... you can agree with their view or not, but I could not explain it better with less words
UBS - "This year financial markets have got off to a strong start after avoiding America's fiscal cliff in December. An upbeat outlook from European Central Bank President Draghi, easier monetary policy in Japan and stronger data in the US, Germany and China have all boosted sentiment. The clearest beneficiary has been the euro; the biggest losers the currencies with AAA-rated bonds. Last year sterling, the Swiss franc, Swedish krona and the Australian, Canadian and Singapore dollars were bought by investors seeking safe-haven alternatives to the euro. This year all have weakened as the Eurozone's debt crisis has abated for now. Over the next few weeks, risk-seeking investors are likely to keep rotating back into the euro away from more minor currencies. As a result we raise one and three month forecasts for EURGBP from 0.82 and 0.80 respectively to 0.87 and 0.85, for EURCHF from 1.22 each to 1.27 and 1.25 and USDCAD from 0.97 and 0.98 to 1.02 each. The outlook for sterling has also dimmed given poor Q4 UK GDP and Prime Minister Cameron's promise to hold a referendum on Britain's relationship with the European Union. The Canadian dollar has also been hurt by the Bank of Canada suggesting policy tightening isn't likely in the near term. We also adjust our AUDUSD and NZDUSD one month forecasts from 1.05 and 0.85 respectively to 1.03 and 0.82, which also lifts our AUDNZD view to 1.26 in one month.
The return of capital to the Eurozone this year is also pushing the single currency higher against the US dollar. Our one month target of 1.33 has been overshot and now we expect EURUSD to spike as high as 1.37 over the next few weeks. But we maintain our three month target of 1.30 and longer term end year forecast of 1.20 as we expect stronger US data to induce the Federal Reserve to scale back its third round of quantitative easing this year. We also are concerned that the Eurozone crisis isn't over..."