Commerzbank’s Michael Pfister has highlighted that the recovery of the EUR/USD currency pair has been delayed due to the ongoing conflict involving Iran. Although EUR/USD rebounded recently on hopes for a Middle East ceasefire, Pfister remains skeptical about a swift resolution to the war and expects the pair to trade below pre-war levels for the time being [1]. The US president announced a temporary halt to attacks on Iranian energy facilities earlier this week, which was extended yesterday to facilitate productive negotiations. Despite numerous denials from the Iranian side, the US continues to address ongoing negotiations [1].
The anticipation of a ceasefire led to a significant drop in oil prices at times, which in turn allowed EUR/USD to gain ground. However, Commerzbank now expects the war to persist until the end of May and has revised its EUR/USD forecast for the end of June downward by two cents [1]. The bank projects that once the war ends, relief should lift EUR/USD back to pre-war levels, specifically targeting 1.18. Furthermore, Commerzbank has postponed its forecasted high of 1.22 from September this year to September 2027, reflecting the prolonged impact of the conflict on growth and currency performance [1].
Overall, the ongoing Iran conflict continues to weigh on EUR/USD, with market participants closely monitoring developments and negotiations for signs of resolution. The delayed recovery and revised forecasts underscore the uncertainty and cautious sentiment prevailing in the market [1].
CONCLUSION
Commerzbank’s revised EUR/USD forecasts reflect the persistent uncertainty caused by the Iran conflict, with expectations for a delayed recovery and lower exchange rate levels in the near term. Relief and a return to pre-war levels are anticipated only after the conflict ends, highlighting the war’s significant impact on currency markets. Market sentiment remains cautious as negotiations continue.