Analysis EUR/USD: welcome to the parity

eu-l15EURUSD dropped to its 20-year lows.

The major currency pair hit new lows – the asset is looking extremely weak. The current quote for the instrument is 1.0022.

A new bottom is at 1.0004, and it’s probably not the limit for “bearish” pressure as they may yet continue pushing the pair downwards.

The last time both currencies were trading in parity was in 2002. The Euro started rising in 2003 and has been above the “greenback” ever since.

The key trigger for this decline is the lagging monetary policy of the European Central Bank, which is far behind the US FOMC. The USD is supported by the Fed’s stiffer approach to its fight against inflation. The EUR is failing due to the Euro Area trade balance issues, which is now experiencing huge deficit due to energy price surge.

Some say that the European economy is already falling into a recession. If so, then the third quarter will be even more unsuccessful for the Euro.

In this light, all macroeconomic statistics have moved to the back burner. Technical charts and market sentiment came to the forefront.

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