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Euro dollar parity? Citi thinks not
21/03/2017
Euro dollar parity? Citi thinks not

Over the past two years, there has been so much talk about the potential for Euro dollar parity. Many market pundits – banks and analysts alike – made the prognosis that the value of the Euro will fall to parity against the dollar. This ideology was most prominent during the apex period of the Greece crisis, with many big banks predicting Euro Dollar parity at the time.

March 21, AtoZForex – Both currencies are surrounded by interesting circumstances which could very well dictate their path in coming months. For instance, the Euro can be driven higher against the greenback by news about the French elections. According to Citi bank, the Euro could jump as high as $1.10 over the next three months if François Fillon scores a victory in the second round, even if Marine Le Pen takes the initial vote.

France elections and the Trump regime

On the other hand, the dollar has been driven lower – quite surprisingly – by the Federal Reserves recent decision to hike rates only for the third time in 9 years. A move which was highly anticipated. Citi bank said it has become less bullish about the dollar. In chief, due to the Trump administration’s current situation as the president finds himself in a heated battle on Capitol Hill over his plans for replacing and repealing the Affordable Care Act. The struggle for the new administration may delay plans for business-friendly proposals, like tax cuts, regulatory reform and a large infrastructure spending programme, the bank added. Hence, Citi has now concluded that it does not expect the rally in the US dollar, saying it no longer expects the greenback to reach parity with the euro over the next year.

Euro Dollar parity technical perspective

Late last year, Yagub Rahimov, the Forex Academy Captain at AtoZForex, shared his stance on the future of EURUSD:

“It seems like Euro is under attack from West (Brexit), South (Italian Financial and Political crisis) and East (Greece and Refugee crisis). At least Scandinavians are not very hostile. From the technical analysis point of view, I am still bearish on EURUSD until 1.0199 which falls onto 138.2%

True Fibonacci Wave retracement zone. From the time point of view this move should be achieved prior to the 18th of January. However from then onward I would expect the bulls to take EURUSD for a ride back towards 1.08 – 1.11 zone.”

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