EUR/USD: It is likely too early for a recovery rally – Commerzbank

It would seem that the market considered last week’s European Central Bank (ECB) meeting to have been positive for the euro. Does this constitute the start of a more pronounced EUR recovery rally? Economists at Commerzbank expect the shared currency to remain under pressure. 

Turning point for EUR?

“The dim outlook for the economy might cause the ECB to act more cautiously over the coming months despite high inflation levels though. Against this background, the FX market is likely to remain sceptical about EUR so it is likely to be too early for a recovery rally.” 

“We see the risk that the situation in connection with energy prices and supply will deteriorate further which might put depreciation pressure on EUR again.”

“The generally positive market sentiment seen over the past days is likely to have provided additional support for EUR. Here too there is a risk that sentiment might change again, as the energy and economic risks are likely to concern the financial markets for some time yet.”