USD will recover more ground against both the EUR and GBP over the coming months – Rabobank

Measured from July 12, the only G10 currencies to have outperformed the USD are the CHF, SEK and NOK. Economists at Rabobank expect the Greenback to continue gaining some ground.

USD will remain well supported into year-end

It remains our view that the USD will remain well supported into year-end and that it will recover more ground against both the EUR and GBP over the coming months. 

US recession risks suggest that the USD may derive support from safe-haven flows as risk appetite diminishes. 

Our expectation that the Fed will keep rates at their peak into next year suggests that the USD could find support from interest rate differentials given that other central banks will also be ending their rate hiking cycles.

We maintain forecasts of EUR/USD 1.08 and GBP/USD 1.26 on a three-month view.