Given that the expectation of a rate hike in the US is already priced in for September, further strengthening of the US Dollar would require a steeper rate curve than expected, which is unlikely to happen. The Fed will be very cautious and slow rising rates.
Hence I expect the EUR to rebound once the first rate hike is through, which results in a classical "Buy the Rumor, Sell the News" scenario. A return to the 1.17-1.27 range is likely, which corresponds to the Fair Value Range based on Purchasing Power Parity of the OECD:
Hence I expect the EUR to rebound once the first rate hike is through, which results in a classical "Buy the Rumor, Sell the News" scenario. A return to the 1.17-1.27 range is likely, which corresponds to the Fair Value Range based on Purchasing Power Parity of the OECD: