This week has the euro severally testing parity. However, it has yet to break below cogently; This builds up anticipation for next week’s parity risk and the ECB rate announcement on Thursday.
Earlier this week, the ECB pre-announced a 25bps rate hike while the money market currently prices 30-35bps. This creates the possibility of a martial surprise; however, the current Italian political backdrop will negatively weigh on this outcome.
Euro bears have been unable to pierce below the 1.0000 psychological support zone according to the price action on the daily EUR/USD. Fundamental headwinds, however, state that the issue is a matter of when. The December 2002 swing low would be considered if this occurs at 0.9854, but a 50bps rate hike and the reopening Nord Stream 1 pipeline could negate this move and bring EUR/USD to focus on the 1.0210 resistance level.