The euro received very little support from the recovery in sentiment in the eurozone (EuroStoxx up 2%) on Thursday. In the view of economists at ING, EUR/USD remains at risk of hitting parity soon as concerns about a gas crunch in the EU persist. 

EUR still looking vulnerable

“Concerns about a gas crunch in the EU remain elevated, as the Nord Stream 1 pipeline is due to shut for 10 days of annual maintenance on Monday and some fear Russia may not resume flows at the end of that period.”

“We expect to hear more on euro weakness from ECB members, but the predominance of external downside risks still suggests a somewhat limited ability for hawkish rhetoric to lift the currency.”

“The risks of EUR/USD dropping to parity in the coming days remain relatively elevated, with further developments in the gas market and the US CPI figures likely to be major drivers along with the usual combination of risk sentiment and Fed-ECB policy differential.”