Commerzbank's Chief Economist Dr. Jörg Krämer anticipates a gradual appreciation of the euro against the US dollar over the coming quarters, with the EUR/USD exchange rate expected to recover once the Iran conflict subsides [1]. Krämer attributes this outlook to several factors, including the perceived erosion of the US Federal Reserve's independence, declining US interest rate expectations, and the current significant overvaluation of the dollar based on purchasing power parity [1].
Commerzbank's updated forecast projects the EUR/USD rate to reach 1.18 by mid-2027, a slight downward revision from the previous forecast of 1.20, and to rise further to 1.19 by the end of 2027, compared to the earlier estimate of 1.21 [1]. Krämer also notes that inflation risks are likely to diminish with the anticipated reopening of the Strait of Hormuz by the end of the year, which could further support euro strength [1].
The bank expects US interest rate expectations to continue correcting downward in the coming months, which is seen as a factor that will weigh on the dollar and support the euro's appreciation trajectory [1]. No immediate market reaction or specific analyst opinions beyond Commerzbank's outlook are mentioned in the article [1].
CONCLUSION
Commerzbank forecasts a steady rise in the EUR/USD exchange rate over the next several years, driven by easing geopolitical tensions, lower US rate expectations, and dollar overvaluation. The bank's projections suggest a medium-term bullish outlook for the euro, with the EUR/USD rate expected to reach 1.19 by the end of 2027.