The bank cites inflationary pressures from the Strait of Hormuz closure and expects ECB growth projections to be revised downward.
Rabobank lowered its EUR/USD forecasts below market consensus, targeting 1.16 in three months. The bank attributes last year’s euro rally to Germany’s debt brake loosening and improved growth expectations, now tempered by inflation risks from the Strait of Hormuz closure.
While the ECB’s latest growth forecasts showed minimal declines, Rabobank anticipates further downward revisions. The bank notes that ECB rate hike expectations have already been priced in, limiting further euro support.
Despite recent euro recovery attempts, Rabobank maintains a cautious outlook, citing persistent growth headwinds and below-consensus projections for the currency pair.