Dollar strength has been a market theme since the start of 2018 while the EUR is the weakest performing G10 currency so far this month. Economists at Rabobank are not expecting a euro recovery.
Key quotes
“We see little chance of a concerted bounce in EUR/USD in the coming weeks unless the fears about coronavirus dissipate sharply.”
“Given the USD’s safe haven function we interpret this as implying that the USD is set to be stronger for longer. By contrast, the EUR is currently being bogged down by the market’s reassessment of the German economic outlook.”
“EUR/USD is likely to continue hovering around the 1.08 levels in the coming weeks. With a lot of bad news priced in, the EUR would likely be sensitive to better news either on the domestic Eurozone economy or about the coronavirus.”
“If the economic news from China and S.E Asia worsens and the market consensus steps back from its hopes for a v-shaped recovery in Q2/Q3, EUR/USD would be vulnerable for a move towards 1.07 and potentially below.”
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