Forex Flash: EUR/USD seen lower in the medium term - Commerzbank

FXstreet.com (Córdoba) - When will the Fed end or reduce QE3 and when will the ECB cut rates again? These two questions are currently dominating the FX market, according to the Commerzbank analyst team. "In both cases the short term economic development is likely to be decisive and on both sides of the Atlantic recent economic data has been rather disappointing", they comment. "The fact that a rate cut has now become more likely is obviously putting pressure on the euro".

"However, the situation on the US labour market has not improved so notably that the Fed is soon likely to reduce its monetary policy easing – a fact that will tend to put continued pressure on USD", Commerzbank says. "It is nonetheless going to become clear over the coming months that the US is well ahead of the euro zone as regards economic momentum, which points to lower EUR-USD in the medium term".