Rabobank - "Late August brought signs that the market was taking renewed interest in the USD. This was largely the result of a step-up in risk stemming from Syria which resulted in an increase in demand for a safe-haven. Over the coming months developments in the mid-East could continue to impact the direction of the USD. That said, the USD is also likely to be heavily influenced by economic developments and in particular the policy decisions taken by the FOMC. CFTC data suggest that speculators pared their long dollar positions during the summer months as the Fed’s message of policy accommodation seeped through. In order to maintain this theme, we expect that the Fed will take a very cautious approach to tapering QE, with an announcement of a modest USD 10bn reduction in September. That said, with long USD positions having been reduced, the USD stands to find support into the final months of the year both from the anticipated reduction in QE and from the improving US recovery. The EUR, however, is likely to only give up ground to the greenback reluctantly. The large current account position in the Eurozone continues to afford the unit strong protection. Given also, the improving economic environment and better levels of confidence in the region, we expect the EUR/USD will be hard pressed to sustain levels below EUR/USD1.30 this year."