Fed To Cut Rates Rabobank

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Fed To Cut Rates Rabobank

Fed To Cut Rates Aggressively In 2026

According to a forecast from Rabobank, the US Federal Reserve will cut rates aggressively in 2026. Based on this, they have set the long-term target for EUR/USD near the 1.20 handle.

The EUR/USD is currently hovering near the 1.1500 handle. This shows that Rabobank is expecting the Euro to gain upside against the greenback due to the Fed's upcoming rate cuts.

Eur/Usd To Move Higher On Rate Cuts

During the next 1-3 months, the US Dollar will remain bullish against the Euro. However, that will soon change once the Fed starts its aggressive rate-cutting cycle in the year 2026.

Once the rate-cutting cycle starts, the US Dollar support will evaporate and allow other currencies to shine. So, it shouldn't come as a surprise for the Euro to gain upside in 2026.

Rabobank also highlighted how the long Euro positions have increased over the months. So, once the short sellers are taken out, it will be smooth sailing for the EUR/USD.

Meanwhile, the exports from Europe are still facing hurdles from the US side. However, the USA has already made trade deals with many countries and is also expected to do the same with the EU zone.

For now, the USA has put a 15% tariff on all imports from the European Union. Over the long run, this will be bad news for Europe's export sector.

But the bigger issue here is that the Federal Reserve will likely reverse its policy for interest rates in the coming months. Once that happens, the investors will start to prefer the Euro against the US Dollar.

Lower interest rates in the USA will erode the US Dollar's support and will also lower the value of the currency. In addition, lower rates will also jumpstart the US economy, but it will come at the expense of higher inflation.

But all of this will be in line with the plan of the US president, who has been consistently making comments on the need for lower rates.

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