EUR/USD could slip towards 1.04 in 2016 – Rabobank

By FXStreet FXStreet (Edinburgh) – Jane Foley, Senior Currency Strategist at Rabobank, expects the pair to grind lower to the 1.04 area in the next months.

Key Quotes

“The extremely low level of interest rates maintained by the ECB has ensured that the EUR is used as a funding currency for carry trades”.

“This type of investment, however, is only popular when risk appetite is elevated and volatility is low”.

“Ongoing concerns about the impact on global growth of slowing demand in China have continued to underpin the EUR”.

“Assuming there are sufficient risk factors clouding to ensure that volatility levels remain relatively high this year, the EUR could remain reluctant to give up much ground to the USD”.

“While interest rate differentials can drive EUR/USD lower, we expect the downside potential to be moderated by a reluctance to short the EUR/USD. We are forecasting a low at EUR/USD1.04 this year”.
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Source:: FX Street