EUR/USD: The strength of the euro remains fragile – Commerzbank

EUR/USD has recaptured the 0.9850 barrier. However, the pair remains vulnerable and could turn back lower very quickly, economists at Commerzbank report.

The threat of the energy crisis remains central issue

“Comments from members of the ECB council suggest that there is disagreement as to how far interest rates should be hiked in the fight against inflation. And that in turn of course depends on how hard the European economy is hit by high energy costs.”

“Chief economist Philip Lane even pointed out that the central bank should deliberately leave the level at which interest rates will peak open so as to be able to react to developments with some flexibility.” 

“Any weak economic indicators, such as potentially the ZEW indicator today, might therefore dampen the positive EUR sentiment again very quickly.”