EUR/USD heavily tested the parity level on Tuesday. In the view of analysts at ING, risks of a break below parity are still high.

Uncertainty around reduction in gas supply from Russia to prevent a recovery 

“The dollar should remain largely supported today around the US CPI release, and a big jump in inflation (not our base case, but possible) may actually be the trigger for another round of USD appreciation and potentially for a break below parity in EUR/USD.”

“On the European front, the lingering uncertainty around a potential reduction in gas supply from Russia may continue to prevent a recovery in the euro for now.”

“We continue to think that the chances of a break below parity are higher than a material rebound in EUR/USD. If we do see a break lower, we suspect that a further technical drop to the 0.9800-0.9900 area is possible.”

See – US CPI Preview: Forecasts from 11 major banks, new peak but at headline