EUR/USD hits 1.17 as European optimism grows – Rabobank

The break above EUR/USD1.17 today is further evidence of both USD weakness and the attractiveness of the European renaissance story, Rabobank's FX analyst Jane Foley reports.

Stronger Euro may stir ECB doves

"That said, just as USD weakness is a boon to US exporters, EUR strength is a headwind for European companies which are already under fire from tariff related uncertainties.

"Economists expect that German growth will remain lacklustre this year and, while the ECB has signalled that it has neared the bottom of its interest rate cutting cycle, further sharp gains for the EUR could unleash ECB doves."

"Also, CFTC speculators’ data are beginning to hint that positioning may be becoming stretched. Thus, while we have brought forward our EUR/USD1.20 forecast from an 18-month view to 12 months, we do not expect the move to be a straight line. We continue to see scope for pullbacks in favour of the USD on a 3-month view."