Rabobank Shifts EUR/USD Forecast Amid Dollar Resilience and Eurozone Weakness

Rabobank is updating its EUR/USD forecast to reflect the Dollar's resilience despite the Eurozone economy's relatively strong performance this year.

The bank attributes the Dollar's strength in part to a shift from expected Federal Reserve rate cuts to rate increases, and notes that higher European interest rates have not provided comparable support for the Euro.

Rabobank is also concerned about energy costs and competitive pressure from China reducing the Euro's appeal as an alternative to the Dollar.

The bank points out that investors unwound bullish Euro positions after the Iran war began, and cautions against treating French bond-market stress as automatic selling pressure on the Euro, noting that sellers of French bonds have been rolling into other EUR-denominated paper.