June 28, 2017 / 7:15 AM / 2 months ago

Deutsche abandons forecast for weaker euro, calls end to dollar rally

FILE PHOTO: The headquarters of Germany's Deutsche Bank are seen in Frankfurt, Germany, January 31, 2017.Kai Pfaffenbach/File Photo

LONDON (Reuters) - Deutsche Bank has abandoned calls for the dollar to rise towards parity with the euro, turning its forecast for the single currency on its head to $1.16 or higher by the end of this year from a previous $1.03.

In a note to clients after the euro surged to a one-year high on the back of comments by European Central Bank chief Mario Draghi, Deutsche analyst George Saravelos said a dollar rally dating back to 2014 had peaked.

"Following President Draghi’s upbeat speech in Sintra, we are completely revising our EUR/USD outlook for the rest of the year," he wrote.

"Our main message is that the euro is likely to be the key vehicle via which financial conditions in the Euro-area will be tightened."

Along with U.S. bank Goldman Sachs, Deutsche have been the most high profile dollar bulls among major lenders, with Saravelos previously calling for the euro to weaken to just 85 cents.

Reporting by Patrick Graham and Jamie McGeever, Editing by Helen Reid

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