Euro seen moving past below parity in four weeks, according to ranges implied by the option markets. A one standard deviation move could see the cross falling to 0.9873, under the worst case scenario, EUR/USD could fall to 0.9545 (two standard deviation move). Speculators (somewhat surprisingly) only have very modest EUR/USD short positions on board and are nowhere near as short as they were during Trump’s trade war in 2019 or back in 2015. Europe is suffering an enormous negative terms of trade shock from energy. Our own medium-term fair value estimates of EUR/USD have fallen and suggest that, even at parity, EUR/USD is not extremely cheap. - ING FX Strategy
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