EUR/USD to fall closer to and below parity on disruptive outcome for gas supplies – MUFG

EUR/USD has been under relentless selling pressure over the past month. As economists at MUFG Bank note, downside risks from energy supply concerns remain in focus. Thus, the pair could inch lower toward parity.

Downside risks to growth for European economies posed by energy supply restrictions

“The negative potential fallout from the Ukraine conflict continues to weigh heavily on the euro. A more disruptive than expected outcome for European gas supplies would increase the likelihood of EUR/USD falling closer to and below parity in the coming months.”

“Downside risks to growth in Europe should ensure that the room for EUR/USD to continue correcting higher should prove limited for now.”