EUR/USD, parity next year?

After the Fed meeting, EUR/USD end-2015 is now projected to 1.05 from parity. This projection assumes that the Fed will start hiking rates in December andthe ECB will announce that it will extend QE for after Sept 2016. In this scenario, EUR/USD is likely to reach parity next year, most likely by the end of Q1.

"These have upside risks in the short-term (this year), but in the longer term (next year), chances are high. If the Fed does not hike at all this year and the ECB does not commit to extend QE yet, EUR/USD could appreciate above 1.15", says Bank of America. 

However, this will not be sustainable. It will be well above the ECB's FX assumptions in its inflation projections. The ECB has in the recent past talked the Euro down whenever EUR/USD crossed 1.15, as such a level increases risks to its inflation pathsuch a EUR/USD level would be above the estimate of equilibrium, which is 1.16, and would be inconsistent with the diverging US and Eurozone business cycles.