EUR to lose ground against the USD in the coming months – Rabobank

Despite this week’s move by EUR/USD below the 1.09 level, the Euro (EUR) remains the third best performing G10 currency in the year to date after the US Dollar (USD) and the Pound Sterling (GBP). Economists at Rabobank analyze Euro’s outlook.

Potential for the EUR to slip vs. the GBP and against both the SEK and the NOK

While we note that EUR/USD is currently trading well below most model-based predictions of fair value, we are concerned that the relative buoyancy of the EUR belies sour growth fundamentals in the Eurozone and specifically in Germany.

We see scope for the EUR to lose ground against the USD in the coming months. Additionally, we see potential for the EUR to slip vs. the GBP and against both the SEK and the NOK.