Economists at Commerzbank have significantly lowered their EUR/USD forecast. The reason is that the euro is likely to continue to suffer from the risk of a halt to Russian gas supplies and from the relatively hesitant European Central Bank (ECB) monetary policy.

A recession in the euro area will increase pressure on EUR/USD

“We now expect a recession for the euro area, triggered by high energy prices, in turn, a consequence of reduced gas supplies from Russia.”

“For 2023, we expect a partial recovery of EUR/USD when it becomes clear that Europe can meet its energy needs without Russian gas, when energy prices settle down again and when it becomes clear that the ECB resumes its rate hike cycle.”

“EUR/USD: Sep-22 1.00 Dec-22 0.98 Mar-23 0.98 Jun-23 1.02 Sep-23 1.06.”