EUR/USD made a significant advance on Tuesday and grazed parity. To what extent is the strength of the euro sustainable? Commerzbank economists believe the common currency should remain under pressureas the energy crisis is far from over.
The market may underestimate the economic pain that the energy crisis will cause
“The recovery is likely to be attributed to a weaker US dollar, which weakened after the disappointing US manufacturing Purchasing Managers’ Index and the significant decline in job openings in August.”
“The strengthening of the euro may also have helped. It seems to me that the market is somewhat more optimistic that the eurozone will get through the energy crisis this winter more easily than feared.”
“It remains highly uncertain to what extent the current energy crisis will continue to weigh on the European economy in the long term, which, in my opinion, justifies an increase in the risk premium on euro exchange rates for quite some time.”
Source: Fx Street
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