EUR/USD: Some upside potential in the short term – Commerzbank

Economists at Commerzbank do not expect a weaker Dollar in the medium to long term. Thus, positive surprises for the Euro are only probable in the near term.

A strong Dollar is justified in the long run

We see some upside potential for EUR/USD in the short term.

Upwardly surprising Eurozone inflation and a more or less synchronised entry of the Fed and ECB into the rate cut cycle should have a slight net positive effect on the EUR.

In the medium term, however, no USD weakness should be justified. The current USD strength should be justified if (as we expect) the US will have a growth advantage over the Eurozone (and most Western industrialised countries) over our entire forecast period.

Source: Commerzbank Research