The Federal Reserve will take over from European Central Bank as the greatest influence for the EUR/USD this week, with its policy release on December 16. While the economists of Rabobank expect the general weakness of the dollar to continue in 2021, the EUR / USD is in a consolidation phase since December 3 and the result of the Fed it could be a new trigger.
At the very least, the market expects the FOMC clarify the policy to follow further. As the US economic recovery is losing momentum and a new fiscal package from Congress is still awaited, we see the possibility that the Federal Reserve could go beyond the guidance provided this week. That said, our main view is that the Federal Reserve will wait until the unfinished business around the election has been cleared up and hopefully until there is more fiscal stimulus in the works before taking more political stimulus.
The fact that the market is waiting for the euro suggests that there is room for gains in the EUR / USD, in particular, given the concerns that will arise from the new restrictions on trading. Germany in matters of coronavirus And given the fact that economic data is likely to worsen before it improves next year.
While we see that risk appetite may cause the EUR / USD to fall by 1.18 In Q1 2021, we have revised our forecast for EUR / USD moderately overall. Our 12-month forecast for EUR / USD is now at 1.23 from a previous forecast of 1.20.
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