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By Bloomberg

If Greece is forced to default, sell the euro. If Greece reaches a deal with its creditors, sell the euro.

That’s the message from strategists including Barclays Plc and Bank of Tokyo-Mitsubishi UFJ Ltd., who say what matters for the currency is the European Central Bank’s bond purchases.

The ECB has said it will keep its 1.1 trillion-euro ($1.2 trillion) quantitative-easing program until at least September 2016, lowering bond yields in the region, while boosting stocks. The single currency is the worst performer this year after the New Zealand dollar among 10 developed-nation currencies, according to data compiled by Bloomberg.

“At this stage, it seems as if the ECB will be the key and bigger driver for the euro,” said Mitul Kotecha, head of Asia Pacific foreign-exchange strategy at Barclays in Singapore. “The ECB continuing to be aggressive through to September will continue to pressure the euro lower. Policy differentials, rate differentials with the U.S. and growth differentials all point to a lower euro.”

He expects the euro to test parity in the third quarter.

The euro surged 9.6 percent from its low on March 16 to its high on May 15 as a pick-up in growth stoked speculation the ECB will shut down QE before its projected end date. The currency has fallen 2.3 percent since then to trade at $1.1188 as of 1:07 p.m. in Tokyo.

‘ECB Trade’

The euro will again be exposed to the “ECB trade,” whereby strong easing compresses bond yields and weighs on the single currency amid widening interest rate differentials, said Yasuaki Amatatsu, an analyst at Bank of Tokyo-Mitsubishi.

“Market focus is shifting from Greece to European-U.S. yield differentials,” Amatatsu said. He sees the euro testing $1.05-$1.06 as early as July.

The shared currency will weaken about 6 percent to $1.05 by year-end, according to the median forecast of analysts surveyed by Bloomberg News.

The common currency has fallen 4.4 percent this year, the worst performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes, after the New Zealand dollar, which dropped 9.2 percent.

Barring Greece exiting the currency bloc and economic deterioration that required additional stimulus from the ECB, the euro probably saw its low in March, said Kengo Suzuki, chief currency strategist at Mizuho Securities Co. in Tokyo.

The common currency fell to as low as $1.0458 on March 16.

“Economic data and monetary policy prospects don’t justify the euro hitting parity,” Suzuki said. “I expect the euro to trade between $1.1 and $1.15 next quarter.”