EUR/USD could re-test 1.08 in the medium-term – Rabobank

By FXStreet Strategists at Rabobank have suggested the pair could grind lower towards 1.08 in a 6-month view.

Key Quotes

“Using CFTC data, US speculators’ positions net USD longs last week fell to their lowest levels since July 2014”.

“In the months that followed speculators built hefty USD longs until they started to reduce them again last spring as they pared back Fed tightening expectations”.

“We have argued that it was the decision by the ECB to use negative interest rates in June 2014 that is responsible for igniting life into the currency war in this period”.

“The ECB’s move sparked a wave of retaliatory measures from the smaller European central banks and created a significant push into the USD which tightened monetary conditions in the US well before the Fed eventually hiked rates in December 2015”.

“Now that these hefty USD longs have been unwound, the USD could find support. We see scope for EUR/USD to edge lower towards 1.08 on a 6 mth view”.
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Source:: FX Street