Bank of America: If the Fed does not cut interest rates this year and the European Central Bank cuts interest rates, EUR/USD may fall to parity

Sina Financial News Bank of America foreign exchange strategist Athanasios Vamvakidis and others said that if the Federal Reserve keeps interest rates unchanged this year and the European Central Bank cuts interest rates three times, the euro may fall to parity against the dollar. BofA's base case scenario is for the dollar to weaken by the end of the year, as they expect slowdown in U.S. economic growth, a Fed rate cut, and an overvalued dollar. But they said the dollar would strengthen if interest rates were not cut by December. "Assuming the market simply delays the rate cut until early next year, we expect EUR/USD to return to 1.05 or slightly lower. They also said that if a new energy shock erupts, it could push EUR/USD below parity, as was the case in 2022.