Rabobank’s Senior FX Strategist Jane Foley notes that the US Dollar (USD) has benefited from renewed safe haven demand and reduced Federal Reserve (Fed) rate cut expectations, with EUR/USD currently testing below 1.17. She highlights that its 1‑month EUR/USD forecast at 1.14 was set before the recent US‑Iran ceasefire and may be reviewed depending on how the conflict evolves and its impact on risk appetite.

EUR/USD pressured by risk sentiment

"For now, we continue to expect the USD to act as a safe haven on bouts of reduced risk appetite with additional support likely being drawn from reduced rate cut hopes."

"In the near-term, however, we expect that short-term movements in the USD crosses are more likely to be dominated by the general mood of risk appetite and by the outlook for US interest rates."

"This factor coupled with this morning’s drop in risk appetite has pushed the USD towards the top of the G10 FX performance table on a 1-day view, with EUR/USD currently testing the water below the 1.17 level."

"That said, demand for safe haven assets has softened this month."

"Our 1 month forecast of EUR/USD 1.14 was established before the recent US-Iran ceasefire."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)