EUR/USD: Markets to punish any ECB hesitation with euro weakness – Commerzbank

After a short excursion below 0.99, EUR/USD is already trading almost one cent higher again on Tuesday. Economists at Commerzbank note that the European Central Bank must meet market expectations this week in order to underpin the shared currency.

EUR/USD to hold near parity if the ECB delivers this week

“The ECB will have to deliver this week so that EUR/USD can continue to hold near parity.”

“In addition to the extent of an interest rate hike, it will probably be important whether it signals that it will stick to an aggressive rate hike pace even in view of the current economic risks.”

“Any hesitation is likely to be quickly punished by the market with euro weakness.”