On Wednesday, EUR/USD closed at its highest level since mid-August. Nevertheless, economists at Rabobank expect the pair to slide towards 0.95 in the next month.

USD strength to remain in place for a further six months or so

“Going into the Jackson Hole meetings, the market was pricing in a full 1 ppt of ECB rate hikes by the October meeting and these expectations have only increased since then. However, rate hikes will do little to prop up the EUR vs. the USD given that investors are likely to remain focused on stagflation risks in the Eurozone and given the USD’s haven function.”

“We continue to expect broad-based USD strength to remain in place for a further six months or so.” 

“We maintain our target of EUR/USD 0.95 on a one-month view.”