EUR/USD: Sustained break below parity looks to be just a week or so away – Westpac

The eurozone economy faces a summer of energy discontent and with the Nord Stream pipeline closed for maintenance from July 11-21, the temperature may rise further. A sustained break below parity looks to be just a week or so away, in the view of economists at Westpac.

European Central Bank to begin the process of normalising policy 

“Growth projections will also have been marked down materially. And depending on whether the Nord Stream pipeline returns at full capacity or not on the same day as the ECB meeting, could be downgraded even further.”

“Given the recent run of 100 bps shocks/unscheduled central bank moves, it is increasingly likely the ECB begins the process of normalising policy with a series of 50 bps moves, rather than a 25 bps opening salvo. However, this will arguably pale into insignificance versus what the Fed will deliver the following week with a likely 100 bps move July 28.”

“With the key 1.0340 level well and truly broken, a sustained break below parity looks to be just a week or so away.”