EUR/USD Back at Parity As Expectations of Europe Falling Into A Recession Increase - Forex News by FX Leaders
German GDP increased by 0.4% in Q3

EUR/USD Back at Parity As Expectations of Europe Falling Into A Recession Increase

Posted Monday, August 22, 2022 by
Skerdian Meta • 2 min read

Covid, political and social tensions, higher interest rates, as well as surging prices have blighted economic prospects, not just in Britain but all over Europe. The eurozone’s big four economies which are Germany, France, Italy, and Spain, have had their growth forecasts for 2023 downgraded, as a combination factors put a brake on activity.

German retail sales declined by 8.8% in June compared with the same month a year ago. Germany’s economy is in a difficult position already. Soaring inflation has eroded people’s spending power, while a looming energy crisis threatens to send the country into a recession. Germany’s Bundesbank made the comments below, predicting a recession soon:

Remarks by the Bundesbank in its latest monthly report

  • A recession is increasingly likely
  • Inflation will continue to accelerate and could peak above 10% this autumn
  • The upside risk for inflation is high
  • The high degree of uncertainty over gas supplies and sharp price increases are likely to weigh heavily on households, companies

That’s a fair assessment and one that isn’t quite clouded by political bias for the most part. It almost seems inevitable now especially when you look at how energy prices have gone parabolic in Europe. The set of PMI data releases tomorrow could be what it takes to tip the euro over the edge as it holds on the brink of parity at the moment.

EUR/USD H1 Chart – The 20 SMA Pushing the Price Down

EUR/USD to fall below parity soon

So, Europe is heading into a recession as the “war on windmills” from the politics continues, which is hurting Europeans instead of Russia. The 20 SMA (gray) has been acting as resistance in the last few trading days, indicating that the selling pressure is strong, which means that the break below 1 will be sustainable this time. So, we continue to remain bearish on this pair and will try to sell retraces higher to the 20 SMA.

EUR/USD Live Char



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