EUR/USD: Prospects of long Ukraine war to undermine the euro – Commerzbank

EUR/USD is slowly saying goodbye to 1.11 levels again. Prolonged Russia-Ukraine war is set to weigh on the world’s most popular currency pair, economists at Commerzbank report.

FX traders have to read the military location map

“The market is likely to see the fact that Russian offensive operations are only happening in selected areas, whereas the Russian invaders are largely starting to dig in defensive positions. I think many market participants regard this as a signal for a prolonged war.”

“The longer the war continues the more likely it becomes that the real economic and inflationary effects above all for the eurozone will be significant. And that is why that prospect is negative for EUR/USD.”