EUR/USD forecast lowered on worries the delta variant of COVID-19 could spread through Europe

Forecasts for EUR/USD via Rabobank:

• 1 month forecast 1.19 (from 1.20 previously)
• 3 month 1.19 (no change)
• 6 month 1.17 (no change)

Commentary from Rabo (in brief):

• the market had been positioned long EUR on optimism regarding the vaccine catch up trade in the region
• Forecasts that the delta variant of Covid could spread through Europe in the summer months could now be undermining confidence in this trade
• Even though it will take a while for the data fog to clear, the June FOMC let the genie out of the bag about the possibility of a Fed rate hike as early as 2022. Even though this is still a minority view it marked a notable shift from the FOMC's March projections.
• Assuming the US data remains broadly supportive, we expect the USD to grind moderately higher vs. the EUR through the course of the year.