Dollar has started 2024 on the front foot. Economists at Rabobank analyze EUR/USD outlook for the coming months.
EUR to perform poorly in the months ahead
Despite this year’s adjustment in market prices, in our view, investors are still very optimistic about a Fed rate cut. The market currently sees scope for a 64 bps cut in the Fed funds target over a 6-month view. We expect a further correction in this outlook and the USD may see some support in the 1-to-3-month view.
Additionally, we expect the EUR to perform poorly in the months ahead largely on the back of weakness in the German economy.
We see scope for EUR/USD to dip to 1.05 on a 3-month view before the impact of Fed rate cuts boosts risk appetite and weakens the USD in the second half of the year.
