EUR/USD to plunge towards 1.17 as the dollar stays on the front foot – Rabobank

In June the USD was the third best performing major currency after the BRL and the MXN – all of the more hawkish central banks. Economists at Rabobank expect the USD to stay on the front foot through the summer but don’t yet see a reason to adjust down their long standing six-month  EUR/USD 1.17 forecast.

Not enough evidence to lower six-month forecast of EUR/USD at 1.17

“We are not yet convinced that real yields are offering enough support to allow a sustained and significant rally in the value of the USD vs. the EUR back to levels seen at the start of last year.” 

“While we have adjusted down our 1 month EUR/USD forecast from 1.20 to 1.19, we are holding our 6 month forecast at 1.17.” 

“For the USD to rally further, we expect that the Fed would likely have to step further into the hawkish camp.”