EUR/USD: Nomura believes fall to parity could be quick if risk aversion no longer supports the pair

Last week, Nomura presented its forecasts for the EUR/USD, suggesting that the pair may test 1.05 before the Fed's meeting on 16 December, and it is realistic to anticipate parity within 3-9 months.

Today, the bank further discusses the short term, in particular the relationship between the EUR/USD and risk aversion:

"Clearly, the Paris attacks will lead to risk aversion. Several EUR/USD peaks in recent months took place in a context of risk aversion, but on the last sessions we have seen a continual decline in the EUR/USD despite the sharp decline of the S&P.

The market may believe that the divergence in monetary policy between the Fed and the ECB is written in stone, and that risk aversion is now less important.

In the end, there is good reason to think that we can aim for parity in the coming months, and if risk aversion is no longer positive for the euro, the fall could be fast."