The situation in Europe looks completely different to that in the US. Inflation expectations here are rising notably. Undoubtedly, such a scenario would be negative for the euro, economists at Commerzbank report.
Is the euro “unbuyable”?
“With gas prices at astronomical levels, there is a risk of a further inflation shock being added to the current one. It does not require much speculation to establish that such a development would be negative for the euro. The ECB would only be able to do the most urgent inflation fighting. Just enough to prevent a spiral of EUR depreciation and inflation acceleration. Some might even fear that it will be unable to achieve even that.”
“If I read that some analysts refer to the euro as being ‘unbuyable’ I do get the impression that EUR levels and sentiment have gone too far. But even under that assumption, there are no reasons for a significant euro recovery – as long as the sword of Damocles of a gas crisis is hanging over us.”
