EUR/USD Needs to Breach 1.02 Before We Can Begin to Talk Parity
The Middle East’s latest conflagration has got Wall Street’s forex researchers on the overdrive, forecasting possibilities for the euro to reach parity with the US dollar amid speculation the crisis will drive up Europe’s inflation with higher energy costs.
Big brand investment banks from JPMorgan Chase to Citibank and Goldman Sachs expect the dollar to reach $1 anytime between the end of this year and the next six months.
But Investing.com’s own analysis, in collaboration with SKCharting.com, shows that for any prospect of euro-dollar parity to be sustained, EUR/USD must breach and hold 1.02 while the Dollar Index — which pits the greenback against the euro and five other major currencies — should get past the 107.37 resistance.
At the time of writing, the currency pair was at 1.0539, off a 22-month low of 1.0448 set on Oct. 3.
The index, meanwhile, was at 106.36, off the 11-month highs at 107.35 also notched on Oct 3.
Charts by SKCharting.com, with data powered by Investing.com
A fall to parity would bring the euro back to levels not seen since the second half of last year, when the single currency fell below $1 for the first time since 2002 after the war in Ukraine cut off much of Europe’s gas supply. Prices were trading at about €50 per megawatt hour on Monday, still far below a peak of more than €300/MWh hit in August 2022. Europe has largely filled its gas stocks in preparation for winter, cushioning it from further disruption.
Speculation that the world’s two leading currencies could reach equal standing has been on-off since the start of 2023, driven often by surging US Treasury yields on prospects of higher-for-longer US interest rates.
Now, there’s renewed concern that an expanding Middle East conflict would
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