EUR/USD seen falling to 1.08 on a three-month perspective – Rabobank
04.08.2023, 17:21

EUR/USD seen falling to 1.08 on a three-month perspective – Rabobank

Analysts at Rabobank see the US Dollar appreciating against the Euro and the Pound over the next few months. They point out that the relative resilience of the US economy suggests that it will be some time before monetary policy is eased.

Key quotes: 

“Fitch’s decision to downgrade the US credit rating has turned attention to next week’s Treasury supply, though the USD’s safe haven appeal suggests that impact from the Fitch decision is likely to be limited.”

“Fed policy remains in the driving seat. While we expect that Fed funds have likely peaked, a higher for longer outlook is USD supportive.”

“While we expect that Fed rates have likely peaked, the relative resilience of the US economy suggests that it will be some time before policy is eased. This factor combined with a growing awareness that the fundamental drivers behind other currencies could be deteriorating should offer the USD broad-based support. We maintain a 3-month EUR/USD forecast of 1.08.”

“Against a backdrop of stagnating economic activity in Germany, we see long EUR positions as vulnerable given the risk that ECB rates may have peaked already last month. We also see long GBP positions as vulnerable given weak growth in the UK and the optimism expressed by the BoE regarding the potential for UK CPI inflation to ease.” 

“We expect GBP/USD to soften to 1.26 on a 3-month view.”

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