Rabobank analysts note that in recent sessions EUR/USD has touched its lowest level since June 2017, but they expect a gradual recovery in the EUR on a 12 month view.
“The move is interesting for many different reasons both technical and fundamental. The push below the 1.12 area reinforces our forecast for a drop towards 1.10 on a 3 to 6 month view. We then expect a gradual recovery in the EUR on a 12 month view.”
“Although numerically EUR/USD1.10 is not far away, it would represent a significant psychological step given the strength of the 1.12 area as support since the end of last year.”
“A persuasive break lower in EUR/USD had been made more difficult by the likelihood that the market is already holding short EUR positions and by the fact that the market consensus continues to call for a move higher in the EUR.”