EUR/USD to remain on the back foot amid large difference between Fed’s and ECB’s monetary policy – Commerzbank

Hope that the talks between the Russian and Ukrainian negotiators might lead to an imminent and peaceful solution after all are supporting the euro. However, the shared currency is expected to remain under pressure as whereas the reversal in interest rates in the US is relatively certain this is still uncertain in the eurozone, economists at Commerzbank report.

The Fed is prepared to fight inflation now whereas the ECB is still hesitating

“No doubt a solution of the conflict and an end of the war would be positive for EUR. However, doubts as to how much EUR would be able to appreciate in the end are justified.”

“This week the US central bank is likely to fire the starting shot for its rate hike cycle, thus making it clear once again that a pretty large difference remains between the Fed’s and the ECB’s monetary policy. The US central bank is prepared to fight inflation now whereas the ECB is still hesitating. And that does not exactly point towards EUR appreciating against USD at present.”