Rabobank’s FX Strategy team has lowered its short-term EUR/USD projections, citing prolonged disruption in the Strait of Hormuz and higher Oil and gas prices. The bank now expects weaker Euro performance versus the Dollar over 1–3 months, while keeping medium-term EUR/USD forecasts unchanged for now but under review as energy and geopolitical risks evolve.

Rabobank trims near-term Euro forecasts

"For some months Rabobank’s EUR/USD forecasts have been positioned below the market consensus and close to the bottom end of the range of market projections. Despite the USD positive implications of the Middle East conflict, this reduced the urgency to re-evaluate our forecasts immediately. However, it has become very clear that shipping through the Strait of Hormuz could be affected for a while."

"We have therefore reduced our EUR/USD forecasts on a 1- and 3-month view to 1.14 and 1.15 respectively from 1.16..."

"For now we have left our medium-term forecasts unchanged, though these will remain under review."

"The EUR is close to the bottom of the performance table, which is likely a function of the market maintaining long EUR positions for some months and the deterioration of the Eurozone’s terms of trade given its stance as a net energy importer."

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