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Jane Foley, chief foreign exchange strategist at Rabobank, notes that the EUR/USD pair has been confined to a range of 1.10 to 1.06 for most of this year.
EUR/USD is set to trade at 1.12 on a 3-month timeframe.
“The rally we have seen this month and the emergence of a new Fed policy cycle suggest that a new range is forming. The upcoming August US labor data and the next round of US CPI inflation numbers suggest that there is room for volatility in the US dollar in the near term as the market adjusts its expectations for the size of the Fed’s September policy decision.”
“We see scope for potential pullbacks to the EUR/USD 1.10 level if key US data in early September comes in on the strong side of market expectations. However, against the backdrop of Rabo’s revised view that four consecutive years of economic growth could see further slowdown, Federal Reserve Bank “A rate cut may be on the cards, and we have revised our 3- and 6-month EUR/USD forecasts to 1.12 and 1.11 respectively from 1.09.”
We left our 9 and 12 month olds. EUR/USD Forecast At 1.10 assuming that US inflation concerns may receive another boost next year as a result of the US election outcome.
