EUR/USD: Energy supply disruption to drag the pair below parity – MUFG

The EUR has declined by a further -2.1% against the USD over the past week as the pair moves closer to parity for the first time since November 2002. Economists at MUFG Bank expect EUR/USD to dip below parity in the coming days. 

Germany recorded its first trade deficit in May since 1991

“It now appears only a matter of time before EUR/USD falls back below parity. The main driver for EUR weakness continues to be building concerns over greater disruption for European economies from tightening energy supplies.”

“According to reports in the FT, the worsening supply situation is already encouraging energy rationing.” 

“The sharp deterioration in Germany’s trade balance has also attracted more market attention last week. It was reported that Germany recorded its first trade deficit in May since 1991. It has mainly been driven by the sharp rise in import (energy) prices.”