EUR/USD to fall below parity on a gas supply crisis in Europe – Commerzbank

It seems clear that the prospects for Europe are not rosy at present. In the event of a gas supply crisis, the EUR/USD could slump below parity, economists at Commerzbank report.

Fears of a gas crisis are overshadowing everything

“A gas supply crisis would be a Europe-specific problem. If things turn out as badly as that, it would only affect Europe, would only affect the ECB’s monetary policy and would therefore constitute a reason for idiosyncratic EUR weakness.”

“If it does happen, I expect EUR/USD levels below parity. The fact that in our projections I expect rising EUR/USD levels is only due to the fact that based on our bank’s central scenario there will not be a gas crisis in Europe.”