EUR/USD: Medium-term recovery will not last forever – Commerzbank
Economists at Commerzbank analyze the long-term growth advantage of the US Dollar and its implications for the EUR/USD pair.
US growth advantage: an argument in favor of the Dollar
With EUR/USD at current levels, the Dollar is already quite expensive. The US growth advantage is not news after all but has been observed for some time. Nonetheless: if it became clear that the significant growth advantage of the US is permanent and not just the result of a temporary period of European weakness, an even more pronounced undervaluation of the EUR would be justified. That is not yet the case.
If my colleagues, the US economists, are correct and the US will slide into recession next year, a massive EUR undervaluation would seem unjustified. That, by the way, is one of the arguments for our EUR-bullish medium-term view.
However: once the US recession is over, our US economists expect the US growth advantage to come to the fore again. That too confirms our view that the EUR recovery we expect to see medium-term will not last forever.
Author
FXStreet Insights Team
FXStreet
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