The environment for USD is likely to remain difficult for now – Commerzbank

Yesterday’s start into the new week was comparatively quiet. USD is likely to struggle for the time being, economists at Commerzbank report.

EUR should remain supported for now

“It remains to be seen whether the situation on the markets will continue to calm further. Nervousness is likely to remain high this week, and we should probably still expect sudden moves depending on the news flow.”

“In the second half of the week, the first estimates of March consumer price inflation from the Eurozone countries will be published. Whereas the headline rate should have continued to fall due to base effects, the core rate is likely to remain elevated and illustrate once again to the ECB that its concerns about inflation are justified. Against this background, EUR should remain supported for now, in particular after the Fed sounded rather dovish last week.”

“The price index for personal consumption expenditure (PCE deflator), the Fed’s preferred inflation measure, is due in the US at the end of the week. While the nervousness on the financial markets continues, the Fed might prefer a more balanced form of communication even if the inflation data were to surprise to the upside. That means the environment for USD is likely to remain difficult for now.”