In the opinion of economists at Rabobank, safe-haven flows could keep the US dollar stronger for longer. Subsequently, the euro, the pound and the yen are set to weaken against the greenback.

Cable seen back at 1.20 and potentially below on a three-month view

“While a US recession in 2023 suggests that the market will by then be pricing in Fed rate cuts, the USD could be slow to give back its gains until confidence in global growth and risky assets starts to repair. Consequently, we maintain our view that the USD is likely to be stronger for longer.” 

“We retain our forecast that EUR/USD is at risk of dipping back to the 1.03 area on a three-month view. We also see cable back at 1.20 and potentially below on a three-month view and maintain our one and three-month USD/JPY forecast of 135.00.”