FXStreet (Córdoba) - Lutz Karpowitz, analyst at Commerzbank noted that low inflation in the euro area supports the downward movement in EUR/USD and thus making them lower their year-end forecast to 1.3200.
"Despite good macro data, the Fed still hesitates to act. USD strength is therefore muted
but should last correspondingly longer. Low inflation in the euro area supports the
downward movement in EUR/USD".
"But the Fed’s hesitation is, at the same time, an argument suggesting that EUR/USD still has
considerable downside potential. For as long as the Fed does not obviously prepare the market for rate hikes, there is still a risk that it will actually do nothing".
"When this risk is priced out, the USD should continue to rise. For this reason we have reduced our forecast for the year-end to 1.32".