Euro Dollar Is Approaching Parity Fast!

EURUSD is approaching parity pretty fast. EURUSD is just 500 pips away from reaching the parity level. It is trading at 1.04931 level. The downtrend that started last year somewhere in June 2014 is still going strong and it is being expected by the analysts that EURUSD will go down much below the parity level. “I think we’re heading towards parity and that’s the logical conclusion of where we’re heading next,” David Zahn, head of European Fixed Income at Franklin Templeton, told CNBC Wednesday. “Originally, I was thinking next year (we’d see parity), but at the rate we’re going it does seem like it could be much sooner than that.”

If you are a currency trader, the best EURUSD trading strategy right now is sell. Since June 2014, EURUSD has fallen around 3,500 pips. The important question that is being asked how fast will EURUSD fall now. ECB QE program is expected to weaken Euro even more. Combine this with a USD getting strong. That combination sent the euro to a 12-year low against the dollar this week and nothing suggests a rebound over the next couple of years, according to Goldman Sachs. In 2017, the shared currency is even expected to fall to as low as 80 cents, which would be the weakest level ever for the euro. Less than a year ago, investors fretted about the strength of the euro when it almost hit $1.40 in May, worrying that the strong currency would strangle the fragile economic recovery in the euro bloc.

This is what Goldman sees. Some analysts see EURUSD reaching parity level much earlier. This is going to happen due the fact that ECB QE program is weaking Euro on the other hand good economic recovery is strengthening USD. There is a talk of FED raising the interest rates. The surging dollar is on the verge of accelerating even more as investors shift their focus to the prospect of higher U.S. interest rates from the catalyst provided by the European Central Bank’s bond-buying program.

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