EUR/USD Slides to 1.02 as Parity Risk Returns to Headlines

EUR/USD fell to 1.0210 this week, only about 2% from parity. Driving factors include: Germany's final manufacturing PMI at 44.3, remaining in contraction for a 16th consecutive month; hints from the ECB Vice President of another 25 bp cut in September; and the continuing widening of the US-Europe rate differential. Technically, 1.0200 is near-term key support; a clean break lower would set 1.0000 parity as the next target. Options market data shows the implied probability of EUR/USD trading below 1.00 over the next month has risen to approximately 12%.