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23 Feb 2015
EUR/USD likely to remain between 1.12-1.15 on a 6m view – Rabobank
FXStreet (Barcelona) - According to Jane Foley, Senior Currency Strategist at Rabobank, alongside Greece, Fed’s Yellen’s testimony this week might keep EUR/USD volatile as uncertainty regarding the Fed rate hike looms, and further shares the forecast for the pair over a 6m and 12m view.
Key Quotes
“While Greece’s economic difficulties are likely to remain a source of volatility for EUR/USD over the spring and early summer, the Federal Reserve will also be headline news in this period.”
“The testimony from Fed Chair Yellen on Tuesday and Wednesday will be gleaned for any fresh news regarding the current thinking of policy makers particularly in light of the conflicting signals from recent US economic data.”
“Last week’s release of the FOMC minutes indicated that ‘many’ members of the FOMC were concerned that a ‘premature’ hike in rates could be detrimental to the labour market recovery. Although this was balanced by the news that ‘several’ members of the committee were worried about the impact of a late rise in rates, the implication is that the FOMC might yet be some way from reaching a consensus on a June rate rise.”
“We maintain our view that the Fed is unlikely to hike rates before the end of the year. Insofar the market currently expects that the Fed is likely to have hiked rates by September we expect that the USD’s gains this year will be moderated as the consensus adjusts.”
“It is our central forecast that EUR/USD will move gradually towards the 1.10 area on a 12 mth view. We expect uncertainties regarding Greek to ensure a choppy outlook for EUR/USD into early summer but that most activity will be contained between the 1.12 and 1.15 area on a 6 mth view.”
Key Quotes
“While Greece’s economic difficulties are likely to remain a source of volatility for EUR/USD over the spring and early summer, the Federal Reserve will also be headline news in this period.”
“The testimony from Fed Chair Yellen on Tuesday and Wednesday will be gleaned for any fresh news regarding the current thinking of policy makers particularly in light of the conflicting signals from recent US economic data.”
“Last week’s release of the FOMC minutes indicated that ‘many’ members of the FOMC were concerned that a ‘premature’ hike in rates could be detrimental to the labour market recovery. Although this was balanced by the news that ‘several’ members of the committee were worried about the impact of a late rise in rates, the implication is that the FOMC might yet be some way from reaching a consensus on a June rate rise.”
“We maintain our view that the Fed is unlikely to hike rates before the end of the year. Insofar the market currently expects that the Fed is likely to have hiked rates by September we expect that the USD’s gains this year will be moderated as the consensus adjusts.”
“It is our central forecast that EUR/USD will move gradually towards the 1.10 area on a 12 mth view. We expect uncertainties regarding Greek to ensure a choppy outlook for EUR/USD into early summer but that most activity will be contained between the 1.12 and 1.15 area on a 6 mth view.”