Ending Iran War Seen as Bigger Boost for Euro Than ECB Rate Signals

Commerzbank said the European Central Bank would need to signal that its rate hikes could exceed market expectations for the euro to rebound significantly. According to Jin10, the bank said this would be challenging given that markets were pricing in slightly fewer than three rate hikes this year. Commerzbank said the ECB could raise rates next Thursday and could hint at a second hike. However, it said a stronger signal on rate increases would require new forecasts showing inflation risks had risen significantly, which it said appeared unlikely. The bank added that ending the Iran war would provide a larger lift to the euro, while the ECB could still raise rates.