Some upside potential over the next two or three quarters – Commerzbank

Economists at Commerzbank share their ECB and Fed forecasts and their implications for the EUR/USD pair.

The ECB, unlike the Fed, should not cut its key rates

Because the ECB, unlike the Fed, should not cut its key rates, there is still some upside potential for EUR/USD over the next two or three quarters. 

As long as inflation in the Euro area is falling, the ECB with its rates on hold appears to be a more credible inflation fighter, from which EUR/USD will probably benefit. However, this perception will be reversed, if Eurozone inflation starts to rise again in the middle of next year. EUR/USD will then tend to weaken again.