According to analysts from Rabobank, there are not enough reasons the change their year-end target of the EUR/USD pair of 1.17. They point out there is not only potential for the US dollar to stay on the front foot in the coming months, but also there is scope for the euro to soften
Key Quotes:
“Today there is a clear safe haven element behind the stronger tone of the USD. This is demonstrated by the fact that the JPY is the only G10 currency to have outperformed the greenback on a one day view. Not only is there the potential for the USD to stay on the front foot in the coming months, but there is scope for the EUR to soften. “
“The ECB expected to reinforce its dovish policy settings at this week’s policy meeting. Additionally, politics are entering into the sights of the single currency. We retain our long held year-end target of EUR/USD1.17.”
“While we have been anticipating a stronger USD this summer, with US real yields having retracing the move triggered after the June FOMC meeting, we don’t yet see sufficient reason to alter our EUR/USD 1.17 target. That said, it is possible that the impetus for another leg lower in EUR/USD could come from the single currency.”
“Through most of this year so far, it has appeared that the USD have been the most dominant currency in the EUR/USD exchange rate. This week, however, the ECB Council meeting is lining up to be the most important scheduled market event. Beyond that, Germany faces a key election in September and next year French will also go to the polls.”
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