The Barclays Research Team expect the EUR/USD pair to trade neutral to lower in the coming months amid tempered expectations of aggressive rate cuts.
Key Quotes:
“Expect a more or less flat EUR/USD the next quarter ahead.
EUR/USD to move towards 1.08 by Q2 2020 vs. 1.06 previous forecast.
Expect the Fed to ease in the face of persistently low inflation, sizeable external risks and moderation of US growth.
The intensity of cuts and the risks to the path have moderated.
Indefinite suspension of further US tariffs and technology sanctions on China – and likely retaliation – imply a modestly better growth path for both economies and for connected trading partners, reducing risks to the global economy.
We now see a more persistent but shallower path of USD appreciation, as there is a less negative bite from US interest rates in the near term and less of a rise in non-US risk premia, given the improved global outlook”.
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