Commerzbank’s Michael Pfister notes that EUR/USD has rebounded on hopes for a Middle East ceasefire, but he doubts the war will end quickly and expects the pair to trade below pre-war levels for now. The bank has cut its June EUR/USD forecast by two cents, still looking for 1.18 after the war ends and 1.22 only by September 2027.

War-driven delay to Euro recovery path

"Earlier this week, the US president announced a temporary halt to attacks on Iranian energy facilities, which were extended yesterday, to allow time for productive negotiations. There have been many denials from the Iranian side since then, but the US side regularly addresses the ongoing negotiations."

"Amid this hope for an end to the war, the oil price at times fell significantly and EUR/USD was able to gain ground again."

"As long as the war continues, the exchange rate is likely to settle at lower levels than before the war."

"Since we now do not expect the war to end until the end of May, we have revised our EUR/USD forecast for the end of June downward by two cents."

"Although the war is likely to leave its mark on growth, the relief over its end should lift EUR/USD back to the level seen before the outbreak of the war (i.e., 1.18)."

"As a result, we no longer expect our projected high of 1.22 to be reached as early as September of this year, but rather in September of next year."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)