EUR/USD might quickly drop like a hot potato below parity on recession fears – Commerzbank

EUR/USD is currently trading within a 1.00-1.04 range. If there is a trigger that catapults the pair out of the range, this breakout will most likely happen to the downside, in the view of economists at Commerzbank.

Few reasons why EUR/USD should break out of its current 1.00-1.04 range

“There are currently few reasons why EUR/USD should break out of its current 1.00-1.04 range, as there is no fundamentally new information at the moment that is likely to lead to a significant change in the Fed's or ECB's monetary policy course. At the same time, however, the risks for the euro are to the downside.”

“If the purchasing managers' indices show sharp declines in the next publications, which increases the probability of a recession in the eurozone, the market might quickly drop the euro like a hot potato and push EUR/USD below parity.”