EURUSD: Parity is still on the cards – BAML

By FXStreet FXStreet (Delhi) – Research Team at BAML, suggest that the dovish Fed delays but does not derail our call for parity in EUR/USD but we have revised our EUR/USD end-2015 projection to 1.05 from parity.

Key Quotes

“Our projection still assumes the Fed will start hiking rates in December and the ECB will announce it will extend QE beyond September 2016. Indeed, our Europe economics team now expects such an announcement at the October ECB meeting.”

“Furthermore, beyond extending QE (in time), odds of an expansion (in quantity) are rising, but we think this particular debate is still very much data dependent. In this scenario, we would expect EUR/USD to reach parity next year, most likely by end-1Q, as the Fed continuously hikes rates every other meeting and Eurozone inflation remains well below the ECB target.”

“Our projections have upside risks in the short-term (this year), but we are confident about them in the longer term (next year).”
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Source:: FX Street