A STRONG EURO IS UNLIKELY IN THE LONG TERM – COMMERZBANK
The Euro lost a good 2/3 of a big figure in EUR/USD units after the European Central Bank (ECB) monetary policy decision. Economists at Commerzbank analyze the shared currency outlook.
Only bullish on the Euro in the medium term
If the ECB were to be the most hasty of the G10 on the way down, i.e. if it were to be the first to start cutting interest rates, it would be all too obvious that the ECB's interest rate policy has a considerable imbalance towards low interest rates over the interest rate cycle. This would be bad for the Euro for two reasons: (1) It would put the euro at a carry disadvantage on the downward path of G10 interest rates. (2) It would give the impression that the ECB is much less determined to fight inflation than other G10 central banks.
We believe that all these prejudices against the ECB are justified and therefore consider a strong Euro unlikely in the long term (end of 2024 and beyond).
We are only bullish on the Euro in the medium term because our ECB watchers tell us that the market is wrong and that such an early rate cut is unlikely. Not in April, but later.
Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.
FOLLOWME Trading Community Website: https://www.followme.com
Hot
No comment on record. Start new comment.