EUR/USD has surged above parity. However, the pair is unlikely to extend its race higher, in the opinion of economists at MUFG Bank.

Energy crisis will continue to cap the euro

“We still believe the energy crisis in Europe will continue to limit how far the euro can strengthen on the back of a hawkish ECB, and eventually limit how far the ECB will be to hike rates beyond this year.”

“We remain sceptical over EUR/USD’s ability to extend its advance much further above parity.”