Not only was the US Dollar (USD) the best performing G10 currency in October, but it is the best performer amongst its peers in the second half of the year. Indeed, while the USD picked up some support in the tail end of last week on the remarks from Fed Chair Powell that a December rate cut was not a done deal, the greenback has been quietly finding its feet for some time, Rabobank's FX analyst Jane Foley reports.

EUR/USD slips below 1.16 as USD strengthens

"We were of the view during the summer months that short-covering pressure in favour of the USD would draw EUR/USD back to the 1.16 level from its recent highs. The currency pair is this morning positioned below that level. The question that now needs to be addressed is whether the USD’s recent gains vs. the EUR signal that the currency pair is turning."

"For the past few months, we have maintained a forecast of EUR/USD 1.20 to roughly coincide with the end of Fed Chair Powell’s term next spring. This forecast assumes that concerns over the Fed’s independence will undermine the greenback during this period. That said, we have become less comfortable with this view for various reasons related to both the EUR and the USD."

"While a bout of concerns about Fed independence has the potential to knock the USD in the spring, we see little reason to suspect that the USD is facing a progressive decline vs. the EUR going forward. We will be looking to recalibrate our EUR/USD forecasts once more US data releases come to light."