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The Euro to Dollar exchange rate this week touched parity but it has further to fall say analysts at one of the world's largest investment banks.

JP Morgan this week revises its Euro-Dollar forecasts in response to recent market developments and says the Eurozone's single currency will remain under pressure amidst the European gas crisis which is far from over.

"Recent euro weakening is related to a doubling in regional gas prices," says Meera Chandan, global FX strategist at JP Morgan.

JP Morgan estimates EUR/USD is currently pricing in 20% to 25% odds of a complete shutdown of Russian

gas supply.

The call comes in the same week the Euro-Dollar rate hit a low of 0.9999 amidst a deterioration in European gas markets linked to curtailed Russian supplies.

"The situation is dynamic but the fallout on EUR from curtailed gas supply would be sobering," says Chandan.

The odds of a severe curtailment rose this week when economy ministers in both France and Germany said they feared Russian gas supplies would not be switched back on after a scheduled maintenance to the Nordstream 1 pipeline is completed.

The Nord Stream 1 pipeline, which transports 55 billion cubic metres of gas per year from Russia to Germany, will be shut for maintenance from Monday 11 until July 21.

This date is therefore an important one for Euro exchange rates.

German Economy minister Robert Habeck said he was concerned Russia’s president Vladimir Putin could use the opportunity to stop deliveries completely under some technical pretext.

"Let's prepare for a total cut-off of Russian gas; today that is the most likely option," French Economy Minister Bruno Le Maire said Monday, echoing the fears of his German counterpart.

Should Russia fully weaponise gas supplies by ending exports to the EU the Euro could suffer notable losses given JP Morgan anticipates the Euro-Dollar exchange rate is reflecting 20% to 25% odds of a complete shutdown.

"Non-linear growth risks that idiosyncratically affect the EU prompt us to further cut targets for EUR/USD to 0.95," says Chandan.

JP Morgan's previous Euro-Dollar forecasts saw a low at 1.0. (Set your FX rate alert here).

"A more complete pricing of the adverse scenario could push EUR/USD to test 0.90 if realised," adds Chandan.

The Euro would also potentially lose value to the Pound, according to the analyst: "Scandis and GBP are less energy dependent, but still expected to weaken vs. USD, CHF on regional macros."