FXStreet (Bali) - Jens Nordvig, Global FX Strategy at Nomura, notes that there is finally enough arguments for further downside in EUR/USD, with a test of parity probable heading into 2016.
Key Quotes
"In 2015, we were reluctant to extrapolate the strong Euro depreciation trend from Q1, and we never had parity in our forecast for EURUSD."
"All told, our relatively conservative forecasts for the Euro in H2 2015 have proved to be in the right ball park."
"But based on available information currently, there is likely further downside in store for EURUSD both in the remainder of 2015 and in 2016."
"In particular, if the ECB is willing to continuously lower its deposit rate during 2016, we think there is finally a high probability that parity (1.00) will be tested."
"The most likely timing is mid-2016, given that it may take that long for the Fed to deliver its ‘second hike’ and given that market psychology around Euro trading has become more cautious."
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