Is parity between the dollar and euro seen on the horizon?

Euro/dollar on Friday successfully updated the minimum from eight months. On Thursday "bears" did not have quite a bit: the instrument stumbled on 1.0913 (the "bottom" stood at 1.0911), but on Friday the market has corrected this misunderstanding. Dollar rises in price everywhere, rapidly and confidently. The main trades in EUR/USD at the beginning of the week go around 1.0880, sellers goal shifted to 1.0821, a minimum of March 10 this year.
Nothing new has happened. Just in the background there was an empty macroeconomic calendar, investors continued to win back the results of the meeting of the European Central Bank, which took place on Thursday. The belief that Mario Draghi will soon (possibly this December) will announce the extension of the quantitative easing program, is growing with each passing hour. While in the ECB at the official level it is still not discussed, but also the time to make such a decision is enough.
Mitigating of European QE on the background of interest rate rises by the Federal Reserve System draws in the investors imagination very colorful pattern, where the euro is weak, falls on each sneezing, and the dollar is strengthening its market position. There, you see, speaks about parity become louder and louder.
However, it's not that simple. Perspectives outlined above are already in currency quotations, everything else is emotions and reactions. So in December will still be euro/dollar movements, perhaps with drops to 1,06-1,07, but the market quickly will play them back and will return in the medium range of 1,08-1,10.

ECB sounded tougher than expected

The rhetoric of the ECB was much less "pigeon" than expected by the markets. The Central Bank left the policy rate unchanged. Draghi during a press conference said that the possibility of extending QE at today's meeting is not even discussed, and the situation itself does not require expansion of monetary stimulus. It is logical that the euro/dollar has reacted to these statements jump to week highs near 1.1327, from which then corrected.
Overall, however, the ECB is now much closer to the camp of the "doves" than "hawks". Despite the fact that the short-term effects of Brexit have not been as disastrous as expected, in the long term, uncertainty remains. In particular, it is unclear exactly how and when the official UK's out-of-EU procedure will be launched. Up until this process is complete, it will remain a risk to the European economy in general and in particular for the Eurozone. In such circumstances, the ECB must be ready at any time to expand the incentives to prevent systemic crisis. That's why remains the likelihood that sooner or later the European Central Bank may be forced to move to a policy of negative interest rates, as did the Bank of Japan.
In the medium term, taking into account the above, EUR/USD pair should continue to weaken. The goal for the next 2 months - a mark of 1.0950.

The ECB is playing with fire

According to a research by Standard & Poor`s, about 500 million people in the world live in conditions of negative interest rates set by central banks. At the same time there is a threat of feedback loop: negative rates encourage excessive risk appetite, which is to meet from regulators require new measures of quantitative easing. This policy can be justified only in one case: if it leads to an acceleration of inflation and GDP. It is, though, not happening.
Curiously, the study of Standard & Poor`s was published on the same day as the July ECB meeting protocol in which the central bank left the door to expand stimulus package open. In their view, the sluggish dynamics of wages, low inflation expectations, Brexit and the deterioration of the health of banking institutions threaten to slowdown in GDP and consumer prices. It is possible, that in September, the regulator will have to scale up or renew the terms of QE, and possibly, to lower the rates.