EUR/USD to lurch higher towards 1.13 on reassurances about energy supplies to Europe – Rabobank

Economists at Rabobank have chosen not to alter their EUR/USD forecasts. But the one-month EUR/USD forecast at 1.13 now requires some reassurances on the growth outlook in Europe.

EUR/USD to hover around 1.11 by mid-2022

“Europe has agreed to block selected banks from SWIFT. Fears are high in Europe that this may prevent payments to Russia for energy supplies, which could then be cut off. Such a move would trigger a sharp increase in the growth risks facing Europe which we expect would be matched with a potentially aggressive downside move in the EUR.”

“Assuming there is no disruption to energy supplies from Russia to Europe, EUR/USD is likely to hold above its February 24 low just above the 1.11 area and may edge back towards the 1.13 area if western governments issue sufficient reassurances about energy supplies to Europe.”

“We still expect a move to EUR/USD 1.11 around the middle of the year on a mixture of safe-haven demand for USD and Fed policy tightening.”