Euro is at parity; its fate is now with energy markets

EURUSD

EURUSD is trading down 0.44% at 1.0009

The euro’s tumble below $1 for the first time in two decades puts it on course for one of the worst years in its history, especially if the energy price shock triggered by the Ukraine conflict tips the bloc into a prolonged economic crisis.

The single currency has teetered on the brink of parity versus the greenback for days, finally breaching that level on Wednesday. Its 11.8% year-to-date fall is almost on par with losses seen in 2015, the year the European Central Bank unleashed massive stimulus.

Wednesday’s move may open the doors for a move towards $0.96, analysts predict, with some expecting a fall to $0.90 if gas supplies are disrupted much further.

The moves put the ECB in a bind. It is expected to raise interest rates next week for the first time since 2011 to combat inflation running at a record high 8.6%.

Currency weakness exacerbates that inflation problem. Yet the ECB cannot risk aggressive policy tightening for fear of sending economic growth into reverse.

The euro’s latest leg lower came after gas flows through Russia’s Nordstream 1 pipeline shut for 10 days for maintenance. But if Moscow extends the shutdown, Germany — already in stage two of a three-tier emergency gas plan — may be forced to ration fuel.

On technical fronts EURUSD RSI stood at 20.44 and currently it is trading below all MA. So, SELL position can be taken with following target and stoploss:

TRADE SIGNAL – : EURUSD – SELL: 1.0010, TARGET: 0.9996, STOP LOSS : 1.0013

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