EUR/USD remains a little dull. Economists at Commerzbank analyze the pair’s outlook.

High inflation rates would suggest that the ECB might do more

Hardly surprising, apart from the high-profile panel at the ECB Forum this afternoon with Christine Lagarde, Jerome Powell, Andrew Bailey and Kazua Uedo the next interesting event will be the Eurozone inflation data on Friday, with the data from the individual countries tomorrow possibly giving a first indication of what the overall data will be like.

If the Eurozone price data confirms the ECB’s restrictive approach the Euro will remain strong. If it surprises on the upside, I see further upside potential for the Euro. 

As the market believes in the ECB’s determination when it comes to fighting inflation, high inflation rates would suggest that the ECB might do more. As a result, we are more than happy with our forecast of 1.10 for the end of the quarter and confident that we will be able to deliver a precision landing.