Last week we review our forecasts for the EUR/USD, mainly for the will of the German coalition waiting to change the country’s debt brake and unleash a substantial amount of fiscal spending, says Rabobank FX analyst Jane Foley.
Investors change their focus on growth risks in the US
“> That said, we have been in the opinion that after the recent increase in the EUR/USD there would be room for setbacks, or at least one consolidation period. So far, there are no convincing signs of setbacks, which suggests the strength of the purchase impulse behind the upward trend of the euro. The tomorrow’s publication of the US IPC data could be EUR/USD. ”
“The market consensus suggests that the trend of inflation in the US will soften slightly, although the survey of Bloomberg economists suggests that there is some variation in this opinion. Even the data in line with the median suggests that the Fed will probably be cautious about cutting rates both as the market currently expects.”
“That said, investors have clearly changed their focus on growth risks in the US. If US inflation data are robust and the market chooses to ignore the implications for the Fed policy, the impulse that drives the EUR/USD up to rise could find a new short -term incentive. In balance, we maintain our new goal of EUR/USD 1.12.”
Source: Fx Street
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