Analysts expect Euro to remain below parity

Analysts believe the EUR/USD pair is moving to the downside over the next months at a more gradual speed. They have a target of 0.95 in a twelve months perspective.

Fundamentally, the US could continue to be a higher interest rate market and equities continue to appeal to foreign investors. This means the US is likely to attract capital, which helps the USD.

The large negative terms-of-trade shock to Europe vs US, a further cyclical weakening among trading partners, the coordinated tightening of global financial conditions, broadening USD strength and downside risk to the euro area makes us keep our focus on EUR/USD moving still lower (targeting 0.95); a view not shared by the consensus.

The key risk to shift EUR/USD towards 1.15 is seeing global inflation pressures fade and industrial production increase.

The upside risk also include a renewed focus on easing Chinese credit policy and a global capex uptick but neither appear to be materializing, at present.