Commerzbank, led by Chief Economist Jörg Krämer, has cut its 2026 Eurozone growth forecast and now expects fewer ECB rate hikes than futures imply, while still projecting more Fed cuts than markets. The bank sees EUR/USD recovering after the Middle East war, targeting 1.21 by mid‑2027 as the Dollar weakens on excessive US easing and Fed independence concerns.
Eurozone hit, Dollar seen weakening later
“Due to the war in the Middle East, we have revised our forecasts. We are lowering our 2026 growth forecast for the eurozone from 0.9% to 0.6%, meaning we can no longer speak of a genuine recovery. As for the ECB, we expect significantly fewer interest rate hikes than the futures markets.”
“We continue to expect more U.S. interest rate cuts than the futures markets, although these are likely to come later due to higher inflation.”
“EUR/USD should rise again after the war ends and continue to gain ground in the quarters that follow due to the eroding independence of the US Federal Reserve, especially since the dollar is significantly overvalued in terms of purchasing power parity. We continue to expect a EUR/USD exchange rate of 1.21 by the middle of next year.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Source: https://www.fxstreet.com/news/eur-usd-war-driven-forecasts-and-softer-dollar-outlook-commerzbank-202603270857
