EUR/USD 1.00 is one answer to US tariff question
Dec 18 (Reuters) - The likelihood of EUR/USD falling to 1.00 for the first time in over two years remains a key FX talking point on scope for U.S. trade policy to take a protectionist turn following Donald Trump's Oval Office return, with European Central Bank policymaker Pierre Wunsch adding his view Wednesday.
Wunsch told Reuters that "we've already seen the euro depreciating maybe 4 or 5% against the dollar. So it would only take the euro to go to parity" to offset any new 10% tariffs on euro zone imports imposed by Trump's incoming administration.
The consensus expectation that EUR/USD may weaken through Trump's Jan. 20 inauguration is highlighted by CFTC data on FX positioning, which showed the net euro short position rose for a fourth consecutive week to 75,573 contracts - its highest in nearly five years, before the ECB cut interest rates last week.
Another ECB rate cut is expected on Jan. 30 - a day after the Federal Reserve is widely seen keeping rates unchanged.
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Robert Howard is a Reuters market analyst. The views expressed are his own. Editing by Andrew Cawthorne
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