EUR/USD: ECB will not cut its key rate next year despite a slowing economy, boosting the Euro – Commerzbank

EUR/USD reacted sharply to disappointing Eurozone PMI data. Economists at Commerzbank analyze the pair’s outlook.

The market may not yet be fully convinced that the ECB would mutate into a hawk

The Euro's fairly significant weakness in response to Friday's weak PMIs shows that despite the EUR's strength after the Fed and ECB meetings, the market may not yet be fully convinced that the ECB, known for its large dove camp, would mutate into a hawk in an increasingly challenging economic environment. We see things differently. 

Our economists believe that, unlike the Fed, the ECB will not cut its key rate next year despite a slowing economy, which should prove the market wrong and boost the Euro.