Most current global forex investment bank analysts generally believe that in 2018, the euro zone economic growth will support the euro steadily higher, while the dollar continued to weaken, the euro against the dollar in 2018 will rise concussion. Moreover, analysts agree that in the second half of 2018 the euro will be stronger against the U.S. dollar because of the gradual decline in economic risk in Europe, the European Central Bank will be further withdrawn from the loose monetary policy. However, Bank of America Merrill Lynch analysts put forward different views. Analysts at Bank of America Merrill Lynch said the market underestimated the impact of the Trump-driven tax reform on the U.S. dollar but overvalued its economic growth. From Forex blog, its analysts believe the euro will see a "U" trend against the US dollar in 2018, which means the exchange rate will fall by the middle of the year and then gradually rebound in the second half of the year. Bank of America Merrill Lynch expects the euro against the dollar in the first half of 2018 fell to 1.10. As of January 5 Beijing time, the euro against the dollar at 1.2056 or so level. Bank of America Merrill Lynch and most of the world's analysts have different views, then their views so different behind, what are the reasons to support it? Do not underestimate the effect of tax reform on the economy First of all, the most important reason is the boosting effect of tax reform on the U.S. dollar. They think the market ignored (or underestimated) the stimulus effect of the U.S. tax cuts on economic growth. The reason the market believes the tax cuts have limited economic stimulus is because they believe that many businesses, after reducing their tax expenditures, spend the extra money on non-productive activities - for example, stock repurchases, savings, mergers and acquisitions , And this does not help much for real economic growth. But Bank of America Merrill Lynch believes that the market exaggerated this situation, in fact, tax cuts can play a very significant boost to GDP growth. Image Click to open in a new window Athanasios Vamvakidis and John Shin, analysts at Bank of America Merrill Lynch, said: "We think there are two main reasons why the U.S. tax reform can greatly enhance the U.S. economy. First, At present, the United States has basically reached full employment, fiscal stimulus is gradually increasing, and the Federal Reserve is also gradually raising interest rates. Second, the tax reform will guide enterprises to transfer funds back to the United States, which can also support the U.S. economy. Bank of America Merrill Lynch pointed out that U.S. companies currently have more than seven times as much overseas funds as the same period in 2005 - U.S. companies only made about $ 500 billion in overseas funds in 2005 and now reach 3.5 trillion U.S. dollars. Its share of GDP also increased from 3.8% in 2005 to 18.8%. They point out that the market's expectations of U.S. tax reform are too low. "Our survey data shows that 90% of the companies surveyed said they will transfer their funds back to China as a positive response after the tax reform is implemented." Eurozone credit is too tight, adverse economic From the perspective of the financial system, the looser credit means that businesses and individuals are more readily available for funding, while the United States is much looser than the credit environment in the euro area. This also means that the inflation outlook for the United States in 2018 is much higher than in the euro area. Bank of America Merrill Lynch believes that the credit crunch in the euro zone will have a negative impact on the economic growth in 2018. Wamwadidis said: "The issue of credit is a problem for the euro area, and past historical experience has shown that a credit-loosing recovery is usually weak and fragile." Eurozone 2018 political risk or bad euro In addition to the euro area, the first half of the political situation also implies a crisis, political risk may pose a pressure on the euro. Although Germany's Chancellor Merkel promised in the New Year's speech promised to complete the cabinet-building as soon as possible, the differences between the various parties in the world are huge and the difficulty in forming the cabinet is actually quite substantial. In the future, it is more likely that there will be a suspended parliament Case. Image Click to open in a new window Italy will also hold a general election in March next year, and its populist Futsal Movement will be more likely to support it. It is even more likely to revive Europe's fear of a populist crisis. Bank of America Merrill Lynch expects: "The best result of Italy's general election is that non-populist parties form a coalition of parties with slight advantages. The second result is the second general election. The worst result is that the Five-Star Movement Party may Form a new government. "