EUR: Return to above-parity levels looks unsustainable

EUR/USD followed the stellar rally in risk assets yesterday, and is now pressing the 1.000 resistance. We struggle to see much more behind the pair’s rally other than a position-squaring event and a broad dollar correction. Despite European assets rebounding quite sharply, it’s hard to point to any material change in the eurozone’s outlook that would warrant a significant return of market appetite for the euro just yet.

In our view, there is not enough bullish push to keep EUR/USD above parity on a sustainable basis, and we still forecast a drop to the low 0.90 area into year-end.

Today, the eurozone calendar is quite light, with only final PMI figures and France’s industrial production to be highlighted, and there are no scheduled European Central Bank speakers.

Leave a Reply

Your email address will not be published. Required fields are marked *