EUR/USD: How high? - Rabobank

Jane Foley, Senior FX Strategist at Rabobank, explains that on the back of the result of the first round of the French Presidential election, EUR/USD hit its highest level since last November – the month of the US election. 

Key Quotes

“Relief was clearly a factor behind the EUR’s better tone.  However, we would argue that short-covering has been supporting the EUR through most of this year.  Consequently, in the absence of further fresh incentives, additional broad-based upside potential for the EUR could be limited.”

“Going forward, it could be the ECB which provide the EUR with renewed direction in the coming months. Irrespective, the softer USD is also a factor behind the firmer tone in EUR/USD this year and we expect that disappointment over the size of reflation offered by the Trump administration will keep EUR/USD on course for hitting our long standing year-end target of 1.10.”