Here we go again.
Euro-Dollar parity prophets have been strengthened over the past two weeks, as the Euro has dropped in value versus the US dollar. After hovering at around 1.15 on October 14, the past two weeks have seen a steady slide in the Euro’s value. The EURUSD dropped more than 1% on Wednesday, falling below the strategic 1.10 mark for the first time in nearly three months, seeing levels it hasn’t seen since early August.
EURUSD rate, past 3 months. Source: Google Finance.
The Euro’s drop has accelerated since last Thursday, when European Central Bank (ECB) President Mario Draghi surprised markets when he spoke of negative interest rates and the potential for more QE as early as December, as the ECB may try to stave off the risk of a renewed economic slump in the Eurozone.
Draghi spoke to the press after the ECB’s latest policy meeting in Malta, revealing that some members of the ECB governing council favor taking (more) action to stimulate the economy. He blamed the current slowdown in emerging markets, including China, for renewed weakness in the Eurozone’s own economy.
As of the time of writing, the EURUSD sat at 1.091, down 1.3% on the day, and looks to be headed quite soon for the 1.08 area.
So is Dollar parity in the Euro’s near future?