The basis for a weaker dollar in the medium term has already been set, believe in Commerzbank

According to economists from Commerzbank, the prerequisites for the weakening of the dollar in the medium term already exist.

They said that the duration of the dollar's stability at current levels will mainly depend on the size of the Fed key rate raise. Most likely, market participants will be counting on more detailed information regarding the divergence of the Fed members' positions investors can get from the minutes of their meeting tomorrow. At this point, the most important thing for the dollar is to make sure that there is no doubt about the fight against inflation continuing at maximum strength.

Economists added that the sentiment towards the dollar may change to steady only if there are more clear signs of a recession in the U.S. economy. In that case, the question of a Fed rate cut would quickly become an issue.

Finally, they stressed that if the Fed manages to keep inflation in check, as indicated by the latest inflation data, there will be more room to cut rates if the U.S. economy cools. Even at the risk of cutting rates too soon again, which would lead to longer inflation. Therefore, there is a good reason for the dollar to decline in the medium term.