EUR/USD might bottom around 1.04, 12M view – Rabobank

FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, explains that bund yields are near to their bottom and this might slow EUR/USD’s decline, thus forecasting the pair to reach 1.04 over a 12M view.

Key Quotes

“As the debate about the timing of the first Fed hike continues to whip up volatility on the USD crosses, it is notable that German economic data in recent months have been showing clear signs of improvement.”

“While the ECB’s QE plan continues to exert downside pressure on yields, it is possible that a sustained improvement in Eurozone economic data will impact the length of time that the market expects the ECB to continue with its asset purchases.”

“It is our view that Bund yields may be close to their bottom. If this is the case this would be another factor that would slow down the pace of decline in EUR/USD in the coming month and eventually turn the currency pair around.”

“As it stands we have resisted forecasting parity for EUR/USD this year and expect EUR/USD to bottom around the 1.04 level on a 12 mth view.”