ECB-Fed Split Ignites Talk of Euro Sliding to Dollar Parity
- Currency under pressure as ECB seen outpacing Fed on rate cuts
- Bank of America, LBBW see euro-dollar parity as a tail risk
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Talk of the euro touching parity with the dollar is returning as policymakers at the European Central Bank look primed to deliver more interest-rate cuts this year than their US peers.
Lenders including Bank of America Corp. and Germany’s LBBW are wargaming a variety of tail risks and warn of euro weakness ahead if wagers on the differing pace of rate cuts at the ECB and the Federal Reserve play out. Geoffrey Yu, a senior strategist at Bank of New York Mellon, says the euro could touch parity with the dollar this year and doesn’t rule out a cut by the ECB on Thursday.