EUR/USD: Doubts in ECB rate step put pressure on the euro – Commerzbank

EUR/USD is trading at weak levels. In the opinion of economists at Commerzbank, it is possible that the EUR exchange rates are reflecting the market’s doubts as to whether the European Central Bank (ECB) really will hike interest rates soon. 

Doubts in ECB lift-off?

“The end of the Russian gas supplies to Poland and Bulgaria is likely to have intensified concerns that Russia might stop delivering gas to other EU countries and in an extreme case to the entire EU. If we were to see a complete end of supplies a lift-off in the eurozone is likely to be off the agenda. At the same time inflation is likely to remain at high levels.”

“High inflation levels, as well as the risk of economic weakening, which might cause the ECB not to take action, are putting depreciation pressure on EUR.”

“If the FX market had more certainty that the ECB will fight high inflation EUR would probably benefit. However, as long as there is a risk of an energy crisis hawkish comments from ECB members are going to do little to overcome any doubts though.”

See – Eurozone HCPI Preview: Forecasts from six major banks, not peaking yet