Bank of America forecasts: If the Federal Reserve keeps interest rates unchanged, the Euro may fall to parity with the US dollar

Bank of America foreign exchange strategists Athanasios Vamvakidis and others stated that if the Federal Reserve maintains interest rates this year, while the European Central Bank cuts rates three times, the euro could fall to parity against the dollar. The base case for Bank of America is a weaker dollar by year-end as they expect U.S. economic growth to slow down, Fed rate cuts, and an overvalued dollar. However, they said that if there are no rate cuts before December, the dollar will strengthen. They predict that if markets only delay rate cuts until early next year, EUR/USD will return to 1.05 or slightly lower levels. They also mentioned that a new round of energy shocks could push EUR/USD below parity just like in 2022.