Since the ECB seems to be more aggressive and the Fed has kept the rate hike option open, analysts are pushing down their end-year EUR/USD forecast. RBC Capital Markets estimates the pair is likely to be close to the bottom of the 1.08/1.15 range by end the year. The bank's RAT (risk aversion thermometer) has plunged to its most risk-seeking level in three years, and helped to push the pair lower.
Now the policy seems to be more imminently diverging between the ECB and the Fed/BoE. At the Oct 22 meeting, Draghi indicated a shift from "wait and see" mode to "work and assess". That is associated with multiple other hints of further easing to come in December.
As the ECB appears to be more aggressive, RBC Capital Markets anticipates an expansion to the current asset purchase program as well as a 20bps deposit rate cut at the ECB's December meeting.


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