"For us, the fact that the USD has risen into the rarified levels seen in Mar 2020 is not in of itself a reason to fade it" - Credit Suisse.

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The Euro to Dollar exchange rate (EUR/USD) jumped in the wake of the Federal Reserve's decision to raise rates by 50 basis points on Wednesday, but already the gains are looking fleeting and one investment bank says further losses are likely.

Having bounced up to a high of 1.0641 after Federal Reserve Chair Jerome Powell effectively ruled out a more swingeing 75 basis point hike in June, the pair is back at 1.0590 at the time of writing.

Should the Euro prove unable to stick its post-Fed gains then market focus will inevitably return to the downside.

"The bottom line is that we still refuse to rule out moves like EURUSD pushing below parity in the months ahead," says Shahab Jalinoos, Head of FX Strategy at Credit Suisse.

Above: EUR/USD at one-hour intervals.

Credit Suisse says the U.S. Fed was never likely to really deliver the kind of 'hawkish' surprise that would have prompted another major round of Dollar buying.

But they say the likelihood of an extended period of rate hikes will ultimately prove supportive of the Dollar against the Euro.

Credit Suisse's U.S. economists are looking for two more consecutive 50bp hikes as part of the remaining 200 basis points worth of hikes they say are likely to fall over the remainder of 2022, followed by another 100bp in 2023, leaving them a touch more aggressive than the market.

"This has led us to take on a generally bullish USD view," says Jalinoos.

Credit Suisse currently hold a EUR/USD forecast for 1.0340. (Set your FX rate alert here).

"For us, the fact that the USD has risen into the rarified levels seen in Mar 2020 is not in of itself a reason to fade it," says Jalinoos.

If anything, the balance of risks are pointed to the downside.

"We still refuse to rule out moves like EURUSD pushing below parity in the months ahead, given the asymmetry we still sense in the direction of still-higher US rates," he adds.