Bank of America says that the euro’s value will only drop to the point where it is equal to the US dollar in the worst case scenario where everything goes wrong.
When asked about rumours that the euro might soon reach parity with the U.S. dollar, Bank of America analysts said that such a drop would only happen in the worst-case scenario and would only last for a short time.
“Some analysts keep coming up with new ways that EUR/USD could reach parity.” People at Bank of America, led by Athanasios Vamvakidis, said, “The analysis is not always wrong, but it is often based on everything going wrong.”
Analysts said that any level of parity between the euro and the US dollar would probably only last a short time before going back to the levels that have been normal for a while now.
Analysts at Bank of America said that the duro and the dollar would only stay equal in the long term if extreme conditions arose that were not seen recently.
Bank of America analysts said that one of the worst-case scenarios could be a new trade war between China and the U.S. They said that any sustained drop to parity between the euro and the dollar would require a lot more protectionism than what happened in the last trade war in 2016.
Analysts at Bank of America said, “EURUSD EURUSD, 0.19% at parity may be possible in the worst cases, but staying there would need even more than what we have seen in the past.” “For us, parity is only possible in really bad cases, and even then, we don’t think it will last for long.”
Over the past year, the euro has lost 3% of its value, and now €1 is worth $1.08.
The last time the euro fell to the same value as the U.S. dollar was in July 2022. This happened because of a “perfect storm of negative shocks,” such as the start of the war in Ukraine in February and differences in the monetary policies of the Federal Reserve and the European Central Bank.
Before that, the euro had been ahead of the dollar for twenty years. It had last been equal to the dollar in July 2002, after the crash of the dotcom stocks bubble.
