EUR/USD: Drop below parity seems a matter of time – Commerzbank

EUR/USD stays above parity. However, the pair is set to eventually fall below the 1.00 level, economists at Commerzbank report.

The news flow remains challenging for the euro

“In an extreme case, the market might assume that a significant widening of spreads, for example in Italian bonds, might cause the ECB to tighten monetary policy more carefully than previously signalled. That means that the news of a government crisis in Italy and spread widening could have had a negative effect on EUR.”

“The news flow remains challenging for the euro though and it, therefore, seems a matter of time when the final straw will then cause EUR/USD to ease below parity.”