Weak dollar pushes the euro, Fed rate hike probability poses threat: Commerzbank

The Commerzbank in its most recent report said that the EUR-USD exchange rate is not rising because of the positive developments in the eurozone. It is essentially rising in light of the fact that the US dollar is under serious pressure.

The dollar is losing no matter how you look at it, not just against the European single money, but also against Asian currencies. That is because the Federal Reserve was unable to convince the market that it will keep up its current pace of interest rate hikes.

Moreover, in a global re-inflationary condition is not any more a huge argument in favour of the US dollar. What's more, as no one is currently as yet expecting USD-positive policy measures from the US government; USD-positive contentions are dissolving like ice in the daylight.

On the other hand, strength of the euro may gradually turn into a migraine for the ECB. In the brains of the Frankfurt central bankers, an excessively fast euro appreciation is not positive for euro zone inflation.

However ECB President Mario Draghi looked extremely casual about EUR strength just a week ago. EUR-USD has ascended by practically another 2½ cents meanwhile – not minimum in light of the fact that Draghi's words gave the feeling that no EUR bull needs to fear the ECB. Mr Draghi may very well have shot himself the foot.

According to the bank report, regardless of the possibility that the ECB sees things a little distinctively now, it has a long informative street in front of it in the event that it needs to talk the euro down. As a matter of fact, Draghi figured out how to moderate euro thankfulness in 2014 through shrewd remarks however he needs to talk in a roundaboutly in such cases. What's more, it will take a while for such weak communication to affect the FX market, the Commerzbank noted in its report.

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