The euro fell to its lowest level this year as the European Central Bank looks set to cut interest rates before the Federal Reserve, fueling market discussion of just how much further it could fall.
The common currency dropped nearly 1% to $1.0631 on Friday, breaching the previous low of the year set in February and reaching the weakest in five months. It’s headed for a 2% weekly decline, which would be the worst since late 2022, according to Bloomberg.
The selloff, which follows the ECB’s clearest signal yet rate cuts are looming, is fueling talk among strategists that the euro can fall further to $1.05 by mid-year and even reach parity if the Fed stays on hold this year.
Banks including Bank of America Corp. ING Bank NV and Germany’s LBBW have already warned on the risk.
Adding to pressure on Friday were reports that Israel is bracing for a possible attack from Iran, which boosted demand for the safe-haven dollar.
