After the US election, forex strategists have withdrawn their previous views on the euro and given a new forecast: the euro will fall towards parity with the US dollar.

Barclays, ING Groep, and Nomura International, along with at least 10 banks, significantly lowered their forecasts last week. This marks a significant turning point in recent months. Swiss Pictet Wealth Management is one of the institutions predicting parity. Deutsche Bank believes the euro may fall to even lower levels. The options market shows that betting against the euro is one of the traders' favorite strategies amid prospects of Trump's return to the White House.

After Trump returns to the White House next year, global trade restrictions may become a key pillar of his economic policy, triggering changes in the currency market. This has led investors to sell the euro because, at a time of political uncertainty in the main European economies, trade barriers will harm Europe's export industry. Since Trump's victory, the euro has fallen nearly 3%, approaching this year's low point.

"For the euro, this is the worst-case scenario you can think of," said Mark McCormick, Global Head of Forex and Emerging Markets Strategy at TD Securities. He expects the euro to fall to the level of $1.03 when Trump takes office in January next year. He says that parity is "absolutely possible" after that.

Although last month, with the gambling market favoring Trump's victory, market sentiment has shifted to selling the euro, Republican near-complete governance means that the trade barrier policy plans of this president-elect are more likely to be implemented. McCormick says this "red wave scenario" increases the risk of the euro falling to parity.

Other strategists now believe the euro will be severely hit. Mizuho International expects the euro to reach $1.01 by March, while ING Groep expects it to reach this level by early 2026. This Dutch bank is one of the banks with the largest forecast downgrade, having previously forecasted $1.10. Deutsche Bank's scenario is the most pessimistic.

"If Trump's agenda is fully and quickly implemented, without corresponding policy responses from Europe or China, we may see the euro fall below parity against the dollar, dropping to $0.95 or even lower," said George Saravelos, Global Head of Foreign Exchange Research at the bank, in a report released on Tuesday.

Overall, the median of analysts tracked by Bloomberg currently forecasts the euro/dollar to reach 1.08 next year, significantly lower than the 1.13 before the election.

The options market also indicates that the euro will weaken further. Data from the Depository Trust & Clearing Corporation (DTCC) in the USA shows that about 2 billion euros were bet last month on common options for the euro to fall to parity with the US dollar next year.

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Meera Chandan and other foreign exchange strategists at JPMorgan believe that if the Republicans fully control the government, the euro could fall below 1.05 against the US dollar and move towards parity. They believe the euro faces a double blow of trade barriers and negative sentiment in Europe. Germany is barely avoiding an economic recession, while the political situation there remains tumultuous. France still faces political risks after an early election this year.

Some strategists do not believe that the euro will fall to parity. Amundi SA points out that the market is already heavily biased towards a weakening euro.

"There will indeed be a strong US dollar, but the extent will not be so deep," said Andreas Koenig, Global Head of Forex Management at the asset management company, "Too many people have already positioned themselves for this, so it will not develop so rapidly."

Others are watching whether the euro can break through the support level. The low point this year is near 1.06 USD, with 1.05 USD being the next bottom line. Breaking the latter will lead RBC BlueBay Asset Management to consider increasing their positions in selling the euro.

"The market has not truly digested the scenario of a resounding success for the Republicans," said portfolio manager Neil Mehta, "If Trump is very hawkish, then parity is a possibility. There is a lot of uncertainty surrounding the economic prospects in Europe."