EUR/USD could approach parity if geopolitical risks in the Middle East continue to intensify – MUFG

So far this month, the Euro is consolidating at low levels against the Dollar. The economists of MUFG Bank They analyze the most popular currency pair in the world.

Bearish trend

The main risk of the pair approaching parity would be if geopolitical risks in the Middle East continue to intensify..

While we expect the conflict between Hamas and Israel to remain contained, a broader regional conflict could trigger a sharper upward adjustment in energy prices and result in a weaker Euro. To better capture this risk, we change our bias for EUR/USD from bearish to natural.

On the positive side for the Euro, there has been further evidence that economic growth in China is picking up heading into the end of the year, which is helping to alleviate another downside risk that has been weighing on the EUR over the summer.

Source: Fx Street

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