EURUSD Falls to Parity

By Peter Bukov|

Published: July 12 2022, 12:10 GMT+0

EURUSD Falls to Parity

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The euro remained offered today, bringing the EURUSD pair to 1.0 (parity) for the first time since 2002 as investors continue to buy the USD due to its safe-haven status.
In other words, the USD will be stronger than the euro once the pair falls below 1.0.

Europe is in big troubles

According to the German ZEW headline figures, the Economic Sentiment Index decreased to -53.8 in July, which was lower than the predicted value of -38.3.

In July, the Current Situation sub-index was at -45.8 compared to estimates of -34.5.

The Eurozone ZEW Economic Sentiment Index for the current month showed a value of -51.1 as opposed to the previous reading of -28.0 and the anticipated reading of -32.8.

In the US, optimism among US small-business owners slumped in June to the lowest level since early 2013, according to the NFIB data, confirming the recession is already happening in the US.

“The worst-case (total stop of gas flows) brings recession and probably another 10% fall by the euro from here,” Societe Generale chief FX strategist Kit Juckes wrote in a note.

Bounce soon?

Since the euro is heavily oversold, the combination of the psychological level, the lower line of the downward channel, and oversold conditions could lead to some profit-taking, possibly starting a small relief rally, targeting 1.0360.

However, if the euro fails to defend parity, we might see another leg lower, targeting the 0.99 level.