OPEC fails to deliver anything, or if Mr Trump’s advance in the polls
isn’t halted by the debate scoring, we could go even further even as the
euro meanders trendlessly.
And the more the dollar does find broader support, the more that
limits the long-term downside to EUR/USD and the greater the risk that
at some point, EUR/USD breaks out of the top if its range.
A significant Euro rally is still a tail risk, with
the most likely outlook being drift within the range (today’s
intermediate level to watch is 1.1130), but the dollar’s trade-weighted
value (and the Fed’s appreciation of it) does mean that there’s a skew
building around the long-term outlook.
Even if EUR/USD 1.05 is a reasonable 12-month EUR/USD forecast, a break of 1.30 is as likely as a break below parity now.