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The euro rally o=bserved over the last two weeks has been fuelled by the coronavirus stimulus proposal says the FX analysts’ team at Rabobank, who see the pair still vulnerable, aiming towards 1.05 in the next three months.


Key quotes

“If the bulls are correct, the USD could trend lower from here. In our view, however, the threat of mass unemployment, deep recession and geopolitical tension should keep nerves frayed and the safe-haven USD supported against a broad basket of currencies.”

“If all 27 nations can ratify this budget without too much difficulty, this could be a game-changer in terms of cohesion within the EU. This could significantly bolster the position of the EUR.”

“That said, ‘horse trading’ and ‘muddling through’ are more usual in Europe. Consequently, we consider it to be too early to alter our forecast that EUR/USD will dip lower towards 1.05 on a 3-month view.”