The Barclays Research Team expect the EUR/USD pair to trade neutral to lower in the coming months amid tempered expectations of aggressive rate cuts.

• EUR/USD to move towards 1.08 by Q2 2020 vs. 1.06 previous forecast.

• Expect the Fed to ease in the face of persistently low inflation, sizeable external risks and moderation of US growth.

• The intensity of cuts and the risks to the path have moderated.

• Indefinite suspension of further US tariffs and technology sanctions on China - and likely retaliation - imply a modestly better growth path for both economies and for connected trading partners, reducing risks to the global economy.

• We now see a more persistent but shallower path of USD appreciation, as there is a less negative bite from US interest rates in the near term and less of a rise in non-US risk premia, given the improved global outlook.