EUR/USD has edged down to its lowest levels since the early days of the Ukraine war at the start of March. Much of the move comes from a surge in the value of the USD. That said, the EUR faces issues of its own, economists at Rabobank report.

Grim realities

“Not only have polling ahead of the French Presidential election brought the market cause for concern, but the outlook for the Eurozone economy is still very uncertain given issues related to energy security. In reflection of these concerns we have maintained a forecast of EUR/USD 1 .08 on a one-month view.”

“Our three-month forecast of EUR/USD 1.10 assumes that Macron keeps the presidency in France and that growth sustains in the Eurozone this year leaving market expectations for an ECB rate hike around year-end intact.” 

“In view of the region’s dependency on Russian’s energy, it is difficult not to be concerned about stagflation risks to Europe if Russian energy was embargoed. This remains a potential risk to the EUR in the months ahead.”