What will EUR/USD do in the event of a US recession? The Commerzbank economists still expect the pair to reach the 1.16 level, but it will take much longer than expected.
The US dollar will relax significantly in 2023
“Ongoing risks of a recession are likely to put continued pressure on the euro for longer than anticipated under this new central scenario. As a result, we have postponed the euro’s recovery.”
“If the Fed lowers its key rate again in 2023, but not the ECB, the real interest rate advantage of the US dollar will disappear. Therefore, we expect (now for 2023 and no longer for 2022) that the dollar American relaxes significantly.”
“We continue to leave our EUR/USD target at 1.16, but expect it to take much longer for the pair to reach this target.”
Source: Fx Street
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