Forex News

16:08:47 16-05-2022

EUR/USD to tumble towards parity and even below on a break below 2017 low at 1.0340 – BBH

EUR/USD remains heavy just above 1.04. Economists at BBH expect the pair to break below the January 2017 low near 1.0340 and move towards parity.

ECB tightening expectations remain subdued

“The end of QE June 9 and liftoff July 21 remain fully priced in. However, the swaps market is now pricing in only 140 bp of tightening over the next 12 months followed by another 45 bp of tightening priced in over the following 12 months that would see the deposit rate peak near 1.35% vs. 1.75% at the start of last week. This repricing clearly reflects the worsening economic outlook and is likely to continue weighing on the euro.”

“We continue to target the January 2017 low near 1.0340. If that level breaks, we have to start talking about parity and below.”

 

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