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#1 30-12-2019 10:00:54

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EUR/USD: the pair will likely decline to 1.09 within 3 months

EUR/USD: the pair will likely decline to 1.09 within 3 months and climb back up to 1.11 within a year (Rabobank)

Last week, Rabobank analysts forecasted that the pair will fall to 1.09 within three months and climb back to 1.11 within the next 12 months.

"What is bad for the US economy, however, is positive for the world economy. We expect any decline in the dollar until the end of next year to be moderate, as other central banks also provide more flexible monetary policy conditions. In Australia, this could mean that quantitative easing is implemented for the very first time.

Over the past few years, the market has underestimated the strength of the USD against the EUR. What has changed since the start of this period is that the market is no longer short of the dollar, which means it should become more sensitive to any negative news. The bottom line is that the USD remains the only dominant currency in the global payment system and that the American economy continues to perform well compared to those of other major countries."

We see potential for EUR/USD downside in the spring. However, we think the Fed will aggressively cut interest rates until the end of 2020 and we think that the dollar could possibly lose ground in the second semester of 2020".

Regarding the USD/JPY pair, Rabobank believes that the BoJ's optimism about domestic consumption, combined with additional budget support from the Japanese government, suggests that monetary policy parameters are likely to be on hold for the time being.

"At the margins, this could support Japan's currency, although the relative level of risk appetite is likely to be a bigger driver for the currency in the months to come."

Positive news regarding a phase 1 trade agreement between the US and the Chinese could keep the USD/JPY at the top of its range in early 2020. However, we are seeing renewed trade tensions and fears of growth, which should weigh down on the USD/JPY later in 2020.

"Anything worth having is worth going for - all the way." - J.R. Ewing



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