• EUR/USD will not receive any momentum any longer if the ECB follows the Fed – Commerzbank

Market news

31 July 2023

EUR/USD will not receive any momentum any longer if the ECB follows the Fed – Commerzbank

The European central bankers are copying the behavior of their colleagues in the US. Economists at Commerzbank analyze the implications for the EUR/USD pair.

Equal monetary policies under different circumstances have different effects

If the ECB more or less follows the Fed in its monetary policy that does not mean that EUR/USD will not receive any momentum any longer. Just from a different angle. Because equal monetary policies under different circumstances (inflation, growth, etc.) have different effects.

However, medium-term our EUR/USD projections are nonetheless based on the difference between Fed and ECB: our central bank watchers project that the Fed will soon cut its interest rates again, whereas the ECB will keep rates at the terminal levels for the foreseeable future. That would clearly be EUR-positive.

 

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