Commerzbank Sees Limited Near-Term Recovery Potential for the Euro

The euro may take time to stage a meaningful recovery against the U.S. dollar, Commerzbank analyst Michael Pfister said in a report. According to Jin10, Pfister said markets are unlikely to price in further European Central Bank rate hikes as euro zone inflation may have peaked in May. He said data due on Wednesday is expected to show inflation eased slightly in June as energy prices fell. Pfister added that, in the absence of a decisive event that would lead markets to price in expectations of U.S. Federal Reserve rate hikes, the dollar was also expected to remain elevated. “As a result, the euro-dollar exchange rate may need quite a long time to return to the pre-war level of 1.18,” he said.