Economists at Commerzbank discuss Eurozone economic outlook and its implications for the ECB policy and, therefore, the Euro.

ECB’s rate hikes will hit the Eurozone’s economy at some point

“The PMIs are already suggesting that the ECB’s rate hikes will hit the Eurozone’s economy at some point. That means that the doves on the ECB board might gain the upper hand at some stage, at which point the Euro would lose important support.” 

“Not only would the market possibly have to revise its view that there will be two further rate steps in the ECB’s hiking cycle, but it might also allocate a higher likelihood to the ECB cutting its key rate again due to an economic slowdown. It will be a while until we know that; but over the course of the year the Euro might meet some more headwinds too.”