Rabobank Retain Negative EUR/USD Bias

Rabobank write “we are cognisant of the fact that EUR/USD is already trading well below most model-based estimates of fair value. That said, the EUR has been fairly buoyant in the year to date in the face of Germany’s economic and budget woes.”

• “It remains the fourth best performing G10 currency in the year to date after the USD, GBP and CAD. That said, in recent sessions EUR/USD has broken below the 200-day MA, though it failed to hold below 1.08.”
• “Starting with this afternoon’s release of the US Jolts job opening data, the week ahead is set to bring plenty of drivers for the USD.”
• “Today’s data and Friday’s payroll’s number will give an indication of how sticky wages and services sector inflation is likely to be going forward.”
• “Tomorrow’s post policy meeting press conference from Fed Chair Powell will provide him with another opportunity to potentially push back on market speculation regarding rate cuts. If he chooses not to push back on expectations of an early rate cut, USD bears will likely be reinvigorated.”
• “That said, it is our house view that the Fed will hold rates steady until June. Consequently, we expect the market to continue pricing out expectations regarding an earlier move which should support the USD.”
• “We continue to see risk of EUR/USD dipping to 1.05 on a 3-month view.”