MUFG Research sees a scope for EUR/USD to follow EUR/CHF and USD/CHF towards parity.
"Talk of parity has been increasing in the FX market. It most commonly refers to the likelihood of the EUR falling to parity against the USD. Such speculation was encouraged further last week when EUR/USD broke below support from the lows since the end of last month between 1.0480 and 1.0500. The next key support level for the pair is provided by the low from the start of 2017 at 1.0340 after which there is little in the way of support until parity," MUFG notes.
EUR/USD has already been beaten to parity by EUR/CHF and USD/CHF. USD/CHF climbed back above parity last week for the first time since the before the COVID crisis in late 2019...We still expect the Ukraine conflict and fallout will remain important in driving CHF and EUR performance. A more prolonged conflict and increasing risk of greater energy supply disruption for European economies are increasing the risk of EUR/USD following EUR/CHF and USD/CHF in hitting parity this year," MUFG adds.
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