Weaker US macro data and higher inflation have driven a fall in real yields, weighing on the dollar. EUR/USD rose to the 1.22s. Nonetheless, economists at ABN Amro expect the pair to end the year trading around 1.15 due to a dovish Federal Reserve and an American economic outperformance.
European Central Bank rate hikes to be priced out
“We think that the Fed will be less dovish than the ECB, and that ECB rate hikes will be priced out, weighing on the euro.”
“We expect US economic outperformance to support the dollar in the medium-term.”
“Our year-end 2021 forecast for EUR/USD stands at 1.15.”