Anna 
EUR/USD has surged close to the 1.10 mark, prompting economists at Commerzbank to scrutinize the pair’s future prospects.
In the longer term, despite the European Central Bank’s (ECB) current euro-friendly policies, analysts at Commerzbank highlight the persistent risk of a return to inflation, particularly in 2024 and more prominently in 2025. While the ECB is anticipated to implement more measures than currently priced in by the market, these efforts might fall short of fully mitigating inflation risks. This, in turn, could lead to (euro-negative) risk premiums.
Looking ahead, the analysis considers the potential weakening phase of the U.S. real economy, projected to occur in the summer of 2024. However, it emphasizes that this downturn is anticipated to be temporary, and the United States’ long-term growth advantage is expected to reinforce, resulting in a stronger dollar. Consequently, Commerzbank maintains the perspective that EUR/USD is likely to reach its peak by 2024, with the strength observed in the coming quarters not expected to be a lasting trend.
