EUR/USD: room to the top? — Commerzbank

FXStreet — EUR-USD is about 1,12 increased. How far the recent USD-strength? It’s hard to say. Sure appears, however, that the air for this exchange rate will be thin, Ulrich said light man, the Commerzbank expert.

Important Quotes:

To was still the beginning of the year EUR-USD 1.04, and (almost) all the world already spoke of the parity. Since then, the exchange rate has increased significantly, and – what a surprise? – well forecasts around and to hear beyond the 1.20 mark. Often they come from the same analysts that were calling in January, still the parity out. However, this time should be avoided, the child with the bath water.

Part of the increase of the EUR-USD is the result of the Auspreisens of the «Trump Dollars». The hope that the new US President would, virtually overnight in the area of tax, investment and trade policy in a new era was dawning, and so the Dollar is almost limitless boost to bring, burst in the face of the sometimes chaotic approach of the US Administration thoroughly. The last remnants of the «Trump-Dollar»Trades have returns of the recent «Russia-Gate»crisis. This part of the EUR-USD recovery is justified without question a very good one, is likely to be phased out soon. Because the signals that speak against these old USD-positive arguments that are now long enough so clearly that hardly a lot of market value have not traded for the participants still.

However, a good part of the EUR-USD is due also to a stronger Euro. Because this has appreciated against the Dollar stronger than other currencies. Decisive for this may be that the market now expects already for April 2018, with an ECB interest rate increase. It does not bother anyone, that the ECB, such a view has never spoken the word, but again and again, indicating that she sees herself still on the target. Thus, the inflation expectations in the market even more.

We assume that the ECB will not raise interest rates in the coming spring, and therefore the current EUR strength in the medium term, is unjustified. The stronger the Euro is listed, the more likely the market of the ECB «Forward Guidance» (the de facto excludes such an early move on interest rates) could be ripped out of its EUR — buying mood. In the short term, the EUR may continue, strength. However, each of the market point of view, the opponent of the ECB Statement will be recorded all the more dangerous, the higher EUR-USD.

** FXStreet News Editorial, FXStreet**

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