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Economists at Commerzbank said EUR/USD exhibited an unusual mean-reversion trend in the first half of the year.
Just in case anyone sees this as a future trading rule, the economist warns that EUR/USD’s performance in the first half does not mean it will follow a similar pattern in the next six months.
If (euro zone) inflation eases again, it is less clear what the ECB should do.
Should they lower rates or keep them there for a while? If a rate cut does happen, how quickly will that happen?
The (interest rate) differential between the euro area and the US could be more persistent and could provide a longer-lasting impetus for EUR/USD.
At that point, the mean reversion trend is over.
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