We continue to see risk that EUR/USD will push back above 1.20 in Q2 – Rabobank
|"We expect that the Fed will want to ensure that bond yields remain contained until its goals on both employment and inflation are in its sights," says the Rabobank research team.
Key quotes
"Although it would appear that the Fed wants to avoid yield-curve-control, we haven’t ruled this out as a risk if the bond market show signs of becoming disorderly."
"We continue to expect that higher yielding currencies well perform well against the greenback this year supported by optimism regarding the global economic recovery, cheap funding and a less volatile US administration."
"That said, while we expect that the Fed will rein back USD strength, it is possible the US centric nature of the reflation trade will keep the USD a little firmer than the market had been anticipating. Although we continue to see a risk that EUR/USD will push back above 1.20 in Q2, we don’t subscribe to the consensus call of a move to 1.24 by the end of the year."
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