Investing.com - Analysts are predicting that the euro will continue to fall even after it has reached parity against the dollar amid a gloomy economic outlook in Europe and a rate hike by the Federal Reserve.

 

The euro has fallen 12 percent this year, bringing it to parity with the dollar for the first time in 20 years. A growing number of analysts expect EUR/USD to fall to 0.90 in the coming months.

 

Citigroup analysts said a few days ago that the risk of a "disorderly move" in the euro into the $0.90-$0.95 range is growing.

 

Jordan Rochester, a currency strategist at Nomura Securities in Japan, holds a similar view. He expects EUR/USD to fall to 0.95 by the end of August, and 0.90 if Russia stops opening Nord Stream 1 after the maintenance period ends.

 

Kaspar Hense, senior portfolio manager at asset manager BlueBay, also expects the euro to fall to $0.95 as economic growth slows.

 

The European Central Bank is widely expected to raise interest rates this week in an effort to tame record inflation, but the path may not be as smooth given the slowdown in economic growth.

 

ING analysts said policymakers faced a dilemma between dealing with inflation and the threat of recession on the other.