Economists at Commerzbank analyze EUR outlook after the ECB hiked its key rate last Thursday and ECB President Christine Lagarde signalled that the ECB is now likely to have reached the end of the rate hike cycle.

In the coming days and weeks, there should be increasing clarity about the extent to which there may still be a willingness in the ECB’s monetary policy council to perhaps raise interest rates again. Or what conditions would have to be met for such a step. Such comments should tend to benefit the EUR, as the market currently seems to be betting on an end to the rate hike cycle, which could clear the way for rate cuts next year. Comments suggesting that rate cuts may still be a long way off would also be positive for the EUR.

However, it may also turn out that the Council members are largely in agreement that the end of the rate hike cycle has been reached. The market is then more likely to interpret this as a dovish stance by the ECB and the EUR could come under depreciation pressure.

In the short term, however, the focus is of course on the US Fed. Ahead of the rate decision on Wednesday the FX market will largely wait and see what surprises the Fed might have in store.


Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Read More