Yes

>>Commerzbank analysis: EUR/USD outlook – policy changes bring rate differentials back into sharp focus

Commerzbank analysis: EUR/USD outlook – policy changes bring rate differentials back into sharp focus

crypthub

3/17/2026, 8:01:12 AM

Market Shift

In early 2025 forex markets have turned back to interest‑rate differentials as the main driver of EUR/USD. The divergence between the European Central Bank’s tentative easing and the Federal Reserve’s continued hawkish stance revived the gap that determines capital flows. When the Fed keeps rates higher than the ECB, dollars attract more investment, pressuring the pair lower.

Commerzbank Findings

Commerzbank’s multi‑factor model now attributes roughly 65 % of EUR/USD moves to rate differentials, up from about 40 % in mid‑2024. Their forecast shows a constant 1.75 % spread through all 2025 quarters (ECB 3.25 %‑2.50 % vs Fed 5.00 %‑4.25 %). This widening gap reinforces a bullish bias on the dollar and underpins key resistance near 1.0950 and support around 1.0750.

Trading Implications

Traders are reacting to every ECB or Fed communication and to U.S. employment or Eurozone manufacturing data that could shift expectations. Institutional investors are increasing long‑dollar exposure, while retail positions remain mixed. Nevertheless, geopolitical shocks or unexpected inflation spikes could temporarily outweigh the rate‑differential narrative, so monitoring both policy cues and broader risk sentiment remains essential.