EUR/USD: It is still too early to expect a sustainable reversal – Commerzbank

EUR/USD managed to climb well above the 0.99 mark again on Tuesday. Is the reversal in EUR/USD sustainable? In the view of economists at Commerzbank, there are still a number of vagaries that might soon lead to a deterioration in euro sentiment.

Fall in energy prices might provide some relief at least this month

“The eurozone is unlikely to avoid a recession not least due to the significantly increased energy prices, which eroded purchasing power, over past months. But at least the mild weather means that it can start into the winter as well-prepared as possible. And the significant fall in energy prices, in particular the gas price, might provide some relief at least this month.”

“It is still too early to expect a sustainable reversal. Only yesterday the head of the IEA warned that ‘the world is not out of the woods yet’ as regards gas supplies. He pointed out that in case of an economic recovery in China, global supplies of LNG might soon become tighter which would constitute a challenge for Europe as it has to replace Russian gas imports over the winter.”