EUR/USD: The lower end in the pair remains unattractive – Commerzbank

EUR/USD benefited from the broad US Dollar weakness and climbed above 1.0900. For now, the lower end in EUR/USD remains unattractive, in the view of economists at Commerzbank.

USD outlook hangs by a thread

“As long as everything continues to point towards a recession, the market is unlikely to rethink its expectation of the Fed lowering interest rates again in the second half of the year, which constitutes the basis of the current Dollar weakness. For now, the lower end in EUR/USD remains unattractive.”

“It will simply still take a little while until it becomes clear whether the economy just about cools sufficiently to control the upside risks for inflation, as the Fed seems to expect, or strong enough for the Fed to have to consider renewed rate cuts to deliver on its target of full employment as the market is pricing in. That makes real economic data more significant; as a result, the USD outlook hangs by a thread.”