BofA sees EUR/USD parity as a sporadic event that is “unlikely” to occur

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BofA sees EUR/USD parity as a sporadic event that is “unlikely” to occur

Bank of America analysts noted that while some market observers still speculate on the possibility of achieving exchange rate parity, such an event is believed to be sporadic and historically short-lived.

They cited a chart showing that, barring the bursting of the dot-com bubble, the likelihood of a currency pair trading at or below parity is virtually zero, based on quarterly data.

Analysts said the future trajectory of the EUR/USD pair will depend on the fragile interaction of several factors.

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These include tensions between unsustainable debt levels and the perceived economic superiority of the United States, as well as Europe’s efforts to strengthen its position in the face of grave geopolitical and energy challenges.

Moreover, the possibility of a trade war breaking out after the US elections could put additional downward pressure on the euro.

Despite these risks, Bank of America maintains that a decline in parity is likely to occur only in extreme risk scenarios and is not expected to persist for an extended period.

Bank of America’s assessment comes against a backdrop of sophisticated global economic uncertainty that continues to weigh on currency valuations. The EUR/USD pair in particular serves as a barometer of the relative economic health and politics between the eurozone and the United States.

This article was generated with the facilitate of AI and reviewed by an editor. For more information, see our T&C.

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