Euro: Volatility eyed into late week – Commerzbank
Commerzbank’s Antje Praefcke notes that EUR/USD is likely to stay relatively quiet until later in the week, when the European Central Bank (ECB) meeting and US inflation data could trigger stronger moves.
Commerzbank analyst Antje Praefcke predicts that the EUR/USD exchange rate will remain relatively stable until later in the week, when the European Central Bank's meeting and US inflation data could cause more significant fluctuations. She suggests that expectations for additional ECB rate hikes may need to be adjusted downward, which could negatively impact the Euro.
Meanwhile, stronger US inflation data might provide a minor boost to the Dollar. The most critical events will be the ECB meeting tomorrow and the US inflation figures for August on Friday. If the market revises its rate hike expectations downward, the Euro is likely to weaken. The market is anticipating clues from the US inflation data to determine if the Federal Reserve will raise the federal funds rate next week.
While today's forex market may be subdued compared to the energy market following the latest Middle East escalation, the EUR/USD could become more volatile towards the end of the week.
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