On Thursday, 17 October, the Governing Council of the European Central Bank (ECB) lowered the key interest rate for the third time this year, this time by 25 basis points (bps) – from 3.65% to 3.4%. Experts predict that the regulator will continue reducing rates on a monthly basis until March 2025. After this, the pace of easing may slow down. Naturally, the dynamics of the EUR/USD pair will also be influenced by the Federal Reserve’s pace of monetary policy easing. At present, the key interest rate for the US dollar is 5.0%, which gives it a significant advantage over its European counterpart with its 3.4%.

Many economists, when discussing the future of the EUR/USD pair, do not rule out its drop to the 1.0000 level. The likelihood of the euro reaching parity with the dollar increases amid concerns regarding the prospects of a global trade war. As the currency strategists at Pictet Wealth Management suggest, such a war is quite possible "if Trump wins [the presidential election] and imposes large-scale tariffs." According to Bloomberg, Donald Trump has already hinted that US tariff measures could be directed against Europe, China, and other countries.
Together with the interest rate cut, this possibility has added pressure on the currency of the European bloc, which has ended its third consecutive week of losses against the US dollar. Moreover, the euro has recorded its biggest weekly decline against the British pound this year.

Strategists from J.P. Morgan and ING Groep also do not rule out the risk of EUR/USD reaching the 1.0000 level by the end of the year. This sentiment is confirmed by data from the options markets, where participants are increasingly betting against the euro. Analysts at XPBEE remind us that the last time the EUR/USD pair fell below parity to the 0.95 level was in September 2022. At that time, the decline was very brief, and by October, the pair had returned above 1.0000