EUR/USD to reach parity by year-end - Capital Economics

FXStreet (Bali) - Kevin Ferriter, Markets Economist at Capital Economics, notes that EUR/USD is poised to reach parity by the end of the year.

Key Quotes

"The dollar started to strengthen against the euro again this week, and we believe this will continue with the dollar reaching parity by the end of the year. The backdrop to this latest move was the release of the minutes of the mid-March FOMC meeting, which intimated that a June rate rise is still possible and that the committee’s decision would be data dependent."

"Indeed, interest rate expectations against the euro-zone are a key determinant of the exchange rate, and explain a lot of the dollar’s rise since last summer. (See Chart.) Still, US monetary policy cannot explain the most recent move in the dollar/euro rate completely, as the euro also weakened against all other G10 currencies. Weak economic data probably also played a large role, particularly Germany’s industrial production numbers."