EUR/USD to drop to 1.19 in the next month amid inflation debate – Rabobank
|A couple of misses on US data releases on Wednesday caused the USD to pare back some of its earlier strength. On Thursday, investors seem to ignore rising signs of inflation as the US dollar and stock markets are holding up despite growing worries of higher prices. Jane Foley, Senior FX Strategist at Rabobank, expects the inflation debate to drag EUR/USD down to 1.19 over the next month.
It will take time for the inflation debate to resolve
“With the market consensus pointing to a 995K rise for the April Nonfarm Payroll number and with several forecasters expecting a number well above 1,000K, the USD may continue to find a good level of support in the near-term.”
“Beyond the end of this week, the USD is likely to continue to respond to the debate about whether or not the Fed’s view that inflation will be transitory is correct. Given the market’s sensitivity to the issue, we see risk that the inflation debate will take EUR/USD back to 1.19 on a one-month view.”
“It will take time for the inflation debate to resolve. Meanwhile, it is likely that central banks will deliberately decide to stay behind the curve in order to allow more scope for interest rates to ‘normalise’ eventually. In the meantime, we would expect the inflation debate to lead to temporary bouts of support for the USD.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.