EUR/USD: Any day and act of war is simply poison for the euro – Commerzbank

The EU is planning to tighten the thumbscrews on the Russian economy. As the war in Ukraine prolongs, the euro is set to move downward, economists at Commerzbank report.

The pressure on the ECB is mounting with every day of the war

“With every day and every deed (in Ukraine) the risk rises that the EU representatives decide in favour of the ultimate step. That means that inflation and economic risks in Europe, as in the rest of the world, rise with every day as energy prices worldwide would rise in that case.”

“The pressure on the ECB is mounting with every day of the war. The market cannot be as certain with the ECB as it is with the Fed, as the eurozone would suffer much worse consequences, probably in the shape of a painful recession in case of an oil and gas embargo which in turn might cause the ECB to hesitate when it comes to tightening its key rate.”

“With every day the risk of a recession rises on this side of the Atlantic due to an energy crisis and on the other side of the Atlantic due to an (overly) decisive Fed. As the risks for the eurozone refer to the near future, they are likely to be much more real for the market and therefore weigh more heavily, which means that at present the euro does not stand a chance against the dollar.”