EUR/USD might temporarily come under depreciation pressure – Commerzbank

FXStreet Insights Team FXStreet

EUR/USD was able to stabilize on Monday. Economists at Commerzbank analyze the pair’s outlook.

There is potential for disappointments, particularly on the EUR side

Ahead of the Fed and ECB meetings next week, stabilization might continue for the time being.

The market is pricing in 25 bps rate steps for both meetings, and our economists expect the same. The interesting question is: what will happen after that? The market hardly prices in a further rate hike for the US central bank, but not so for the ECB. From the market’s point of view, the likelihood of a further rate hike in September stands at 70%, so there is potential for disappointments, particularly on the EUR side.

A September step can be called into question. If the market increasingly reaches this conclusion too – the ECB might even provide more concrete reasons for that next week – EUR might temporarily come under depreciation pressure.

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FXStreet Insights Team

FXStreet

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