EUR/USD: arguments for a higher target price - Rabobank

Analysts at Rabobank explained that while they expect EUR/USD to trend higher on a 3 to 12 mth view, it is becoming clear that investors are positioning themselves for a bumpy ride in European politics.

Key Quotes:

"Even if Italian PM Renzi remains in situ after the December 4 referendum, Italy faces elections in 2018 and this could be another conduit for protest votes and anti-EMU sentiment. In the spring both the Dutch and French elections could provide grandstands for nationalism."

"Even though we are assuming that the EMU project manages to escape disaster next year, against this rocky European political backdrop we have pared our forecasts for EUR/USD."

"While we are continuing to expect a recovery to EUR/USD1.08 on a 3 mth view, we are now forecasting only a moderate recovery to 1.10 on a 12 mth view based on our expectations that US yields will soften in that time-frame."

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