Euro outlook deteriorates on high oil prices
Don39;t rule out a move to parity, analysts say
Euro shed 3 in Q3, on track for 3rd year of losses

LONDON, Oct 4 Reuters Resurgent oil prices hurting a deteriorating economy and renewed concerns about Italy39;s fiscal position mean headwinds for the euro are getting stronger, raising the risk of a move back towards the psychologically key 1 marker.

The euro, trading at its lowest levels of this year near1.05 , fell 3 versus the dollar in the third quarter. It is poised for a third straight year of losses.

Much of this can be explained by a broadly firm dollar given the U.S. economy39;s resilience and cash sucked in from abroad as 10year Treasury yields creep towards 5.

Yet increasingly, euro area specific factors, particularly exposure to higher oil prices, risk further weakness in an already stagnating economy, and the single currency.

The euro is especially vulnerable to rising oil prices, with net imports accounting for over 90 of oil products available in the European Union.

High oil prices are weighing on the euro area39;s terms of trade, and if oil prices move above 100 per barrel to 110 per barrel we think it will be difficult for the euro to avoid parity, said Nomura39;s G10 FX strategist Jordan Rochester.

Oil prices surged almost 30 in the last quarter alone, nearing 98 last week, as oil producing group OPEC and its allies squeeze crude supply.

Barclays, among other banks, expects oil to reach 100 in the…