Economic differential is putting pressure on EUR/USD. The growth outlook is likely to be decisive, in the view of economists at Commerzbank.
Increasing divergence
Anyone betting on continued Dollar strength or even appreciation should realise that this is a bet on the performance of the US economy, which results in increased susceptibility of the Dollar against weaker economic data.
Against this background, we continue to see the likelihood of a correction of the current Dollar strength, simply because a lot of US optimism seems to be priced into the USD. However, the likelihood of this happening falls with increasing signs that the economic differential between the US and the Eurozone is increasing.
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