Analysts at Rabobank point out the EUR/USD pair may be in the process of peaking. They see scope for a move lower in the months ahead potentially towards the 1.06 area.

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“Looking ahead, we are expecting the Eurozone economy to stagnate in H2 2023. Given that further ECB rate hikes are already priced in, reasons to buy the EUR may be running dry. In our view, EUR/USD may be in the process of peaking.”

“Any broadening in financial sectors stress is likely to result in the safe-haven bid for the greenback. Either way, in view of widespread fears of a US recession and Eurozone stagnation in H2, in addition to evidence that the post-pandemic recovery in China is disappointingly patchy, we expect the USD find support due to risk aversion. We see risk of dips as low as EUR/USD1.06 in H2.”