The euro has been able to appreciate against a weaker dollar in recent days. Will the European Central Bank (ECB) be able to give more support to the euro? In the opinion of Commerzbank economists, it is possible.
The ECB offers additional support to the euro
“Although the ECB is likely to have to adjust its growth forecasts downwards in December, the current situation regarding gas supply suggests that the ECB could continue to sound hawkish despite a weakening economy and dovish sentiment indicatorsand which could underscore his plans to maintain his anticipated rate tightening cycle. This could provide additional support to the euro“.
“I ask caution. First of all, the great unknown of “how hard is winter going to be” (and how deep the recession could be as a result of gas rationing) remains the elephant in the room. Second, Russian government comments on the use of dirty weapons make me concerned about their possible use. If this were to happen, risk aversion in the markets would increase considerably, and the euro would once again come under significant pressure.”
Source: Fx Street
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