FXStreet (Edinburgh) – In the opinion of Jane Foley, Senior Currency Strategist at Rabobank, the pair could well see its downside accelerated towards the 1.08 area in a 6-month horizon.
Key Quotes
“September price action in EUR/USD may not have been as violent as August but, in reflection of continued market uncertainty, movements have still been chunky”.
“While investors were unsure about policy makers’ intentions straight after the FOMC meeting, a speech by Fed Chair Yellen on September 24 strengthened the odds in favour of a rate hike from the FOMC by the end of the year, in line with our view”.
“Simultaneously the market is speculating that the ECB may be prepared to increase its asset purchasing programme, potentially by the end of the year. In essence this re-establishes the theme of interest rate differentials bearing down on EUR/USD in the coming months and we have maintained our forecast that EUR/USD can head lower towards 1.08 on a 6-months view”.
“That said, the view that interest rate differentials will move in favour of the USD in the months ahead assumes a continued strengthening of US growth and price pressures. Any weakening in US inflation expectations or any delay to policy tightening from the Fed could leave EUR/USD better supported”.
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