Upside potential for EUR/USD? – Commerzbank

By FXStreet Recent high levels of EUR/USD appear elevated and according to Antje Praefcke, analyst at Commerzbank, the higher EUR/USD rises, the higher the probability that the ECB finally decides on surprisingly aggressive easing. There are first signs indicating that the market view is shifting in this direction, which should limit upside potential for EUR/USD ahead of the ECB’s upcoming meeting on 10 March.

Key Quotes

“How much further can EUR/USD rise? Since 1 February the exchange rate is up by more than 4½%, largely driven by the weakness of the USD, which has resulted from the recent pricing out of the Fed’s expected rate hike. For this and next year, at least, the market does not reckon with further rate increases.”

“We do not share this opinion and consider this view as exaggerated: Indeed, we continue to attach a higher likelihood to – albeit slow – hikes. But even if this assumption were correct, this would not help the US currency in the near term. Moreover, it will take quite some time before it becomes evident whether the market or our economists are correct. As long as this is not clear, the dollar’s upside is limited.”

“Will the EUR/USD strength continue in …read more

Source:: FX Street