The momentum has shifted in favour of the US dollar again, according to economists at ABN Amro. However, they still see the EUR/USD trading around the 1.18 level by end-2021.
Expectations of a Fed rate hike boosts the greenback
“The US employment report was better than expected. Moreover, comments of Fed speakers have kept alive expectations of a taper announcement this year. As a result of these developments the 10-year US nominal and real yields have risen, as have expectations of a possible Fed rate hike at the end of 2022. This has lifted the US dollar across the board.”
“The direction that the Fed is taking is clear, and this has supported the US dollar. On the other side of the Atlantic, the ECB has remained dovish and this has weighed on the euro versus the dollar.”
“Our year-end forecast EUR/USD stands at 1.18.”
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