EUR: BTMU says decline is far from over, what is best EUR/USD target?

In July, the euro weakened against the dollar on the basis of the close in London from 1.1142 to 1.1046, says Bank of Tokyo-Mitsubishi (BTMU).

"The euro weakened in July, with the currency markets straying away from the uncertainty of the "Grexit", returning to divergence in monetary policy between the eurozone and the United States. This should mean that the euro becomes the financing currency of choice."

"However, we suspect that there is much more shorting potential up ahead."

"While the euro is weaker over one month, falling commodity prices could actually provide the euro with temporary support. Falling commodity prices mean that other currencies more closely related to commodities have done worse, and this limits the appetite for selling the euro against the currencies that are weakening due to falling commodity prices."

"However, if oil prices fall extends further, this will complicate the achievement of the ECB's inflation target, which could mean that the ECB will need to expand its QE efforts."

"Despite the resolution of the crisis in Greece - at least for now - we maintain our belief that fundamentals point to renewed EUR weakness and a decline of the EUR/USD to parity."

BTMU aims for EUR/USD parity by year's end and 0.96 at the end of Q1 2016.