Euro Forecast Cut as Commerzbank Sees Rising Dollar Hike Risks

Commerzbank's Michael Pfister notes that reduced expectations for Federal Reserve tightening have helped EUR/USD climb, but questions how justified this move is.

He stresses that Kevin Warsh's lack of forward guidance does not preclude rate hikes, and that stronger US labour data could shift expectations back toward tighter policy.

The bank has cut its EUR/USD forecast by two cents across its horizon as perceived Dollar hike risks rise.

Pfister notes that since last week's Fed meeting, expectations of interest rate hikes have been priced out, with the expectation now for 'only' 33 basis points by the end of the year, down from 44 previously.