FXStreet (Edinburgh) – Jane Foley, Senior Currency Strategist at Rabobank, sees pullbacks in the pair finding strong support around 1.04.
Key Quotes
“Our expectation that the Fed may need to raise rates only twice in the year ahead provides good reason to expect that USD strength versus the EUR will be restrained going forward”.
“Adding weight to this view is the euro’s function as a funding currency for carry trades which suggests that EUR downside is more likely when risk appetite is elevated”.
“The euro is also afforded protection by the Eurozone’s current account position. The Eurozone runs a substantial current account surplus and this can have an influential impact on currency flows”.
“In view of the wide ranging global risks this year including Chinese uncertainties, Saudi Arabia/Iran tensions, and terrorism risk in Europe, the EUR may remain well supported by an increase of demand for core Eurozone assets”.
“While we expect interest rate differentials to guide EUR/USD lower, given the risk that the EUR may be reluctant to give up ground, the EUR/USD 1.04 level could provide tough support”.
(Market News Provided by FXstreet)