Safe-haven demand is likely to be heightened in the months ahead. In the view of economists at Rabobank, this is suggestive of further bouts of USD strength, which could drag the EUR/USD pair down to recent lows in the coming month.

Only scope for a move towards the 1.10 area on a 12-month view

“We see risk that the US is heading into recession, likely in 2023. While weaker growth in the US will also impact expectations regarding the pace and extend of Fed rate rises. The USD’s function as a safe haven currency suggests that it is likely to retain a firmer profile for longer.”

“We see risk of another attempt at the recent lows close to EUR/USD 1.0350 in the coming months and see scope for only a moderate move towards the 1.10 area on a 12-month view.”