Commerzbank economists analyze the long-term growth advantage of the US dollar and its implications for the EUR/USD pair.
The American Growth Advantage: An Argument for the Dollar
With the EUR/USD pair at current levels, the Dollar is already quite expensive. The advantage of American growth is not new, but has been observed for some time. However, if it became clear that the significant US growth advantage is permanent and not just the result of a temporary period of European weakness, an even more pronounced undervaluation of the euro would be justified. It is not yet the case.
If my colleagues, the American economists, are right and the United States will enter a recession next year, a massive undervaluation of the Euro would not be justified. This is, by the way, one of the arguments for our bullish view of the Euro in the medium term.
However, once the US recession is over, our economists expect the US growth advantage to return to prominence. This also confirms our view that the euro recovery we expect in the medium term will not last forever.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
