EUR/USD at parity – where now? Economists at Credit Suisse look for a floor here and for a consolidation/recovery phase to emerge.

Do not look to chase weakness for now below 0.99

“Our base case remains that parity/0.99 will essentially remain a floor for now and a consolidation/recovery phase can emerge, with the market also at the lower end of its 5-month channel and also oversold (right-hand chart below). 

“Resistance for recovery is seen at 1.0185/92 initially, with tougher resistance seen starting at 1.0350 and stretching up to the 55-day average, currently at 1.0520.” 

“We continue to identify the broader trend as lower and we thus look to fade a consolidation/recovery (if indeed seen) and our bias is for an eventual sustained break of 0.99 to be eventually achieved. This would then clear the way for further weakness, with support seen next at 0.9750 and with the next meaningful support seen at 0.9609/0.9592 – September 2002 low and high of 2001.”

“Whilst we would look for a fresh consolidation phase at 0.9609/0.9592, a direct break can see support next at 0.9331.”