The US dollar has continued to surge this week, with the key EUR/USD rate breaching a two-decade low and approaching the symbolic parity level as fears around Europe’s energy supply worsened. Solid US data, in particular today’s stronger-than-expected payrolls, and continued hawkish rhetoric from FOMC officials reinforced the growing divergence between the increasingly bleak outlook in Europe and the more resilient US economy. With little relief on the horizon for Europe, and next week’s US inflation data likely to mark a new high for the year and keep the Fed hiking aggressively in the near term, we think the risks remain skewed in favour of the greenback. Indeed, as we discussed yesterday, we think the EUR/USD rate will break through parity before long, and may well trade some way through that level.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services