The Euro fell sharply as experts warned of the possibility of pa

The euro suffered a brutal sell-off in September and continued to sell off on Monday after signs of fresh economic trouble in Europe, just as experts warned that the common currency could reach parity. parity with the dollar in the coming months as US interest rates remain higher for longer.

The EUR/USD exchange rate fell 0.79% to 1.0487 USD after data showed that Euro zone manufacturing activity remained deeply depressed.

Euro on the path to parity

“We see opportunities for further dollar strength that could bring EUR/USD back to parity,” MUFG warned in its October outlook released on Monday.

The last time the euro reached parity and fell below that level was last July, pressured by concerns about an energy supply crisis and economic difficulties.
EURUSD BUY 1.0460 - 1.0470 🔽🔽

✔️TP: 1.0500

❌SL: 1.0420

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While the faltering euro economy, pressured by the weakness of Germany, Europe's economic engine, has come back to haunt the euro, much of that weakness has traces of dollar.

The dollar is unlikely to decline as Treasury yields rise

The Dollar Index, which finished its 11th straight weekly gain last week, has risen more than 7% since its July low, as the world reserve currency gets strength from the Reserve's longer-term message Federal Reserve, pushing Treasury yields to multi-decade highs.

“Yield risks will increase according to the time of year,” MUFG added.

MUFG said the chances of increased dollar strength could be strengthened if the Fed decides to raise interest rates in November.