EUR/USD: EURO STRENGTH OF THE NEXT FEW MONTHS SHOULD NOT LAST – COMMERZBANK

Economists at Commerzbank discuss EUR/USD direction depending on ECB and Fed policy outlooks.

EUR/USD first up, then down

We see upside potential for the Euro against the USD in the short term. In our view, the Fed is likely to cut interest rates again at the beginning of next year, whereas the ECB is likely to hold on to the interest rate level it will soon reach. This makes the ECB policy appear more attractive for the time being. 

In the long run, however, it will turn out that the ECB has less control over inflation because it acts less decisively than the Fed. Therefore, the likely Euro strength of the next few months should not last.