EUR/USD heading towards parity - Natixis

Research Team at Natixis notes that in the face of a weaker US dollar, the EUR/USD recovered briefly above 1.06 after kicking off the year at an all-time low of 1.0341.

Key Quotes

“This recovery was clearly in reaction to the bout of weakness experienced by the US dollar, as the euro weakened against most G10 currencies save the US dollar and sterling. The euro can be expected to remain downbeat in the short term despite the improvement in the European Commission surveys in December, with the Economic Sentiment Indicator at its highest level since 2011.”

“Similarly there was a stronger-than-expected rise in European headline inflation to 1.1% year-on-year, but excluding food and energy, inflation remained weak at 0.9% year-on-year. Next, attention will shift to the publication of the ECB Minutes on 12 January, even though these are unlikely to shed any new light.”