As the third best performing G10 currency this year, the Euro (EUR) has shown resilience in the face of various economic and political challenges. According to Rabobank’s senior FX strategist Jane Foley, the EUR has maintained its position behind the Pound Sterling (GBP) and the US Dollar (USD) despite concerns such as Germany’s sluggish production sector and France’s budget issues.
EUR/USD Outlook: Potential Downside Risk
Looking ahead, the EUR/USD exchange rate is currently trading in the upper half of its range for the year. Foley predicts that the upcoming US election will be a major factor influencing the currency pair in the coming months. Despite the Eurozone’s current account surplus providing some protection, Foley believes that downside risk remains, with a potential target of 1.05 for EUR/USD in the next three months.
While the EUR has shown resilience so far, Foley points out that the current economic and political landscape in the Eurozone does not justify the currency’s high levels. With the market already pricing in a September rate cut by the Fed, Foley expects EUR/USD to trend lower. Support may be found around the 200-day simple moving average at 1.0813.
Analysis and Implications
Despite its strong performance, the Euro faces significant challenges in the near future. Investors should be prepared for potential downside risk in EUR/USD as the US election approaches. It is important to monitor economic and political developments in the Eurozone, as they can have a significant impact on the currency’s performance.
Overall, while the Euro has shown resilience so far, it is important for investors to be cautious and consider potential downside risks in the coming months. By staying informed and monitoring key factors affecting the Euro’s performance, investors can make more informed decisions about their investments.