Euro: Fiscal concerns limit recovery against US Dollar - Commerzbank

Commerzbank's Antje Praefcke highlights that France's fiscal issues have recently impacted the Euro, evoking memories of past sovereign debt crises. She emphasizes that fiscal consolidation in some Eurozone countries is both challenging and unpopular, making it difficult to regain credibility quickly. As the resilient US economy garners attention with limited new data, the Dollar is expected to remain in demand against the Euro, causing EUR/USD to struggle.

Recent days have demonstrated how quickly doubts about government credibility can affect the euro, although focus remains primarily on the bond market rather than foreign exchange. The European Central Bank (ECB) is cautious about intervening with a program, especially since the situation has improved. However, France's fiscal concerns have diminished the euro's appeal, and its recovery seems unlikely soon.

Meanwhile, the US economy remains robust, with the weaker-than-expected US jobs report having minimal impact on the Dollar. The ISM manufacturing and services indexes continue to show expansion. Consequently, there's no need for a US dollar revaluation, particularly as no significant economic data is forthcoming in the coming days.

The Dollar is thus expected to maintain its demand, while the Euro, despite being in the spotlight, urgently requires fiscal credibility to regain momentum.