EUR/USD likely on par by end 2015

EUR/USD at end-2015 is likely at parity. A December Fed rate hike, instead of our call for September, could lead to a more volatile path. Although the US datahas not been strong enough and the Eurozone data has not been weak enough compared with the consensus, both remain consistent with a further divergence of monetary policies, which will be negative for the Euro. 

"Furthermore, the US data is expected to improve further, while Eurozone inflation to remain well below the ECB's target. Even if EUR/USD does not reach parity this year, it will reach by end 2015 well below the current level", says RBC Capital Markets.

If the Fed does not hike this year and/or the ECB sends mixed messages following its new projections, EUR/USD could move again towards 1.15. 

"If Grexit risks come back during difficult negotiations for the new 3-year program, the Euro could weaken further", added RBC Capital Markets.