Rabobank Brings Forward EUR/USD Target Amid US Debt Worries

Rabobank has adjusted its Euro to Dollar (EUR/USD) forecast in response to growing concerns over US debt-market issues. According to Rabobank, these worries have put the US dollar back on the defensive.

The bank's analysts have lifted their near-term EUR/USD view and brought forward a 1.18 target from next year to next spring. They attribute this change to the resilience of Eurozone economic data and the softening of USD forecasts.

While Rabobank acknowledges that the US dollar's dominance in the global payments system remains unchallenged, they warn that fears of government intervention in the Treasury market could lead to debasement pressure on the USD. This might encourage investors to accelerate de-dollarisation.

The bank also highlights stronger-than-expected Eurozone second-quarter GDP and a robust August PMI round, including Germany's strongest manufacturing performance in over four years. However, they caution that another escalation in the Iran conflict could revive growth and inflation concerns for the Euro.