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2026-07-16 18:38:13
[Inflation and War Intertwine: Commerzbank Warns Dollar's Decline Is Unsustainable] ⑴ Commerzbank's foreign exchange analysts point out that while recent US inflation data is lower than expected, the escalating US-Iran conflict is halting the dollar's decline, with geopolitical risk premiums becoming a new variable in exchange rate movements. ⑵ As Middle East conflicts push up energy prices, inflation risks remain high, and market expectations for a Fed rate hike are unlikely to subside in the short term, providing a floor for the dollar. ⑶ The institution believes that the impact of the renewed escalation of the Iranian situation on the market is currently relatively limited, but the longer energy prices remain high, the greater the risk of a full-blown second round of inflation. ⑷ As long as the market continues to perceive this risk and therefore prices in the Fed's rate hike expectations, the dollar's downside will be significantly limited, and a weak dollar trend will be difficult to unfold smoothly.
