EUR/USD expected to be trading below current levels at year-end – Rabobank
EUR/USD has had very little difficulty pushing through its spring high – just below 1.11. Economists at Rabobank analyze the pair’s outlook.
A soft USD is likely to prevail in the near-term
Signs of disinflation in the US and a high level of scepticism about the ability of the Fed to hike rates beyond the July meeting suggest that a soft USD is likely to prevail in the near-term. That said, signs that the ECB’s rate hike cycle is moving towards its peak suggest that EUR/USD could struggle to make further gains beyond the summer season. Additionally, if US recession fears strengthen into the end of the year, the USD could benefit from broad-based support.
We have revised down our USD forecasts across the board on a one-month view in response to the disinflationary signals in the US. However, in view of our house forecasts surrounding US recession risks, and in consideration of the economic headwinds facing the Eurozone, we see EUR/USD trading lower into year-end and through the early part of 2024.
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FXStreet Insights Team
FXStreet
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