Fed Expectations May Be Too High for US Dollar, Warns Rabobank

Rabobank's Senior FX Strategist Jane Foley warns that the US Dollar (USD) may be overpriced due to market expectations of around 100 bps of tightening from the Federal Reserve over the next 12 months.

Foley notes that if the Fed underdelivers, the USD could fall back, but ongoing safe haven flows and the US's status as a net energy exporter are likely to provide some support for the currency.

The EUR/USD pair is currently trading near 1.16 and Rabobank expects it to remain in this range over the next one to three months.