MUFG Bank see potential for the euro to parity against the US dollar in the next 3 months

MUFG Bank expects the euro to weaken against the dollar, potentially approaching parity in the first quarter of 2025, before stabilizing and staging a moderate recovery in the second half of the year.

The forecast reflects the persistence of macroeconomic divergence early in the year, a dynamic the bank sees as a key driver of euro weakness.

However, MUFG analysts believe this divergence is largely priced into current market levels, limiting the scope for further significant downside.

As these macroeconomic disparities begin to fade, the euro is anticipated to regain some ground later in the year.

This article was written by Eamonn Sheridan at www.forexlive.com.