Analysts at Rabobank have been estimating that the EUR/USD pair will be in the 1.10/1.11 region by the end of the year. They see the risks of such a move have risen.
“Talks that perhaps the German government will bow to calls of a fiscal belt loosening has breathed a little support into the EUR. In September it is likely that the outlook for the Eurozone and the reactions of the ECB will be instrumental in determining the direction of EUR/USD.”
“Although the market has reacted well to the assumption that Italy could avoid a snap election and another budgetary battle with the EU in the near term, Italian politics combined with Brexit risks remain potentially negative factors for the EUR.
“For now we maintain our view that EUR/USD could trade at 1.10 before the end of the year. While risks for a break lower have grown, our expectation that the pace of Fed rate cuts are likely to accelerate in 2020 suggest that there is still scope for EUR/USD to head a little higher medium-term and we maintain our forecast of 1.15 on a 12 month view.”
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