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May 13 - 06:55 AM

EUR/USD - COMMENT-EUR/USD Plunge Through Parity Would Be Nightmare For ECB

By Rob Howard  —  May 13 - 05:00 AM

The European Central Bank's fight against inflation will get tougher if EUR/USD drops below 1.00 for the first time in 20 years, given that commodities are priced in dollars.

The probability of a EUR/USD parity test before the next ECB meeting on June 9 has risen following Thursday's risk aversion-spurred fall to an EBS low 14 pips shy of 1.0340 (2017 low).
There is plenty of clear blue water under 1.00, with 0.8563 marking the 2002 EBS low (0.8228 was the all-time EBS low in 2000).

Last week's CFTC data showed IMM speculators flipped to their first net EUR short position since January in the week ended May 3 -- although the net EUR short of 6,378 contracts was tiny in comparison to net JPY and GBP short positions of 100,794 and 73,813 contracts respectively. nL2N2WY22J

The flash estimate of euro zone inflation for this month will be released on May 31.
Euro zone inflation hit a record high of 7.5% in April. nL2N2WR0O5

Related comment: nL2N2X40RY

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Source:
Refinitiv IFR Research/Market Commentary

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