EUR/USD has fallen over the past few days. In the view of economist at Commerzbank, inflation data from the eurozone is unlikely to change the Euopean Central Bank’s (ECB’s) cautious course, therefore, the pair is set to stay under pressure.
Difficult for EUR to appreciate significantly against USD for now
“Today’s inflation data from the eurozone is unlikely to provide any new momentum. Some inflation data from individual countries has already been published, and it looks as if the rate of inflation in the eurozone might have crept up further in June.”
“Even an upside surprise is not likely to cause the ECB to implement a larger rate step in July. The majority on the monetary policy council seems to prefer a cautious start, which today’s data is unlikely to change.”
“Medium-term, we assume that USD will ease against EUR as, contrary to the eurozone, we are projecting a recession for the US next year, which is likely to cause the Fed to implement rate cuts.
“At present, however, the market is also likely to see recession risks for the eurozone (energy crisis). And as the ECB is significantly lagging behind the other central banks it is likely remain difficult for EUR to appreciate significantly against USD for now.”
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