EUR/USD heavily tested the parity level on Tuesday. In the opinion of ING analysts, risks of a break below parity remain high.
Uncertainty around reduced gas supply by Russia will impede a recovery
“The dollar should remain firm today around the US CPI release. A big jump in inflation (not our base case, but possible) could be the trigger for another round of dollar appreciation and potentially a break below parity in EUR/USD.”
“On the European front, the persistent uncertainty around a possible reduction in gas supplies by Russia may continue to impede a recovery of the euro for now.”
“We continue to think that the chances of a break below parity are greater than a major bounce in EUR/USD. If we see a break to the downside, we suspect a further technical drop to the 0.9800-0.9900 zone is possible.”
Source: Fx Street
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