As Paris is slowly trying to come back to some sort of normality after the shocking atrocities of last Friday's terrorist attacks, Europe finds itself again in the middle of a crisis.

The euro depreciated vs. the U.S. dollar following the attacks, and spent Monday morning in the red -- but how low can the European currency go from here?

It looks like it can weaken further still. Here are some of the factors weighing on the single currency:

  • Terrorism. It is not a new threat, but the Paris attacks have brought this issue sharply back into the spotlight. The European Union will need to take steps to protect itself, and, with European politicians notoriously at odds over common foreign policy, expect a lot of bickering and finger-pointing, resulting in damaging uncertainty.
  • The refugee crisis. So far, the European response to the increasing humanitarian drama of the refugees from Syria has been inadequate. The issue has pitted Eastern European countries vs. Western European ones and has opened divisions at the heart of the continent. Politicians should come to a common conclusion regarding how to tackle the crisis. True, an important step was taken at the weekend, with the agreement between the U.S. and Russian presidents to let the U.N. mediate a deal between the opposition and the Syrian president, but more needs to be done to ensure the refugees can return home and live peacefully in their own country. If the European Union decides to help Syria rebuild -- as it has already said it would help Turkey financially deal with the strain that the nearly two million refugees are putting on it -- investors should expect even easier monetary policy on the continent.
  • Portugal. Last week, the (formerly newly elected) conservative Portuguese government fell after the leftist opposition voted down its governing program. This essentially has thrown the country into a mini-crisis. The former Prime Minister wants the Constitution to be changed to allow for early elections, but the leftist parties argue that they should be allowed to govern instead. The Constitution says early elections cannot be held within six months from general elections. The leftist Portuguese parties have gathered under an anti-austerity banner.
  • Greece. It seems incredible that, well into its third bailout, Greece is still not back on track -- but some things just take time. The government led by Prime Minister Alexis Tsipras (remember him? Yes, that's right; the one who campaigned against austerity, led his people into a referendum in which they voted overwhelmingly against austerity, then went ahead and promised to implement austerity nevertheless, in order to get more money from eurozone countries) still has not agreed with its creditors on some of the measures it needs to implement to unlock more funds.
  • Quantitative easing. European Central Bank President Mario Draghi promised in October that the bank will do more to ease monetary policy further, and reinforced that message in a speech last week. The data seem to support this. Eurozone growth came in lower in the third quarter, at 0.3% vs. 0.4% in the second quarter. Germany's growth slowed to 0.3% from 0.4%, but France's picked up to 0.3% from zero in the second quarter.

OK, all this means the single European currency will remain weak. But will the euro hit parity with the dollar anytime soon?

The chart below says no.

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Source: Societe Generale Cross Asset Research

Essentially, since the beginning of the year the euro's exchange rate has been correlated with the long-term interest rate differentials between the eurozone and the U.S., with the recent widening of the 10-year yield spreads leading to a weaker euro.

However, analysts at Societe Generale have calculated that in order to justify further depreciation towards parity, the spread with 10-year U.S. Treasury yields would have to widen more and faster, something that would be hardly justified in the near term, as the market already expects monetary policy in the two regions to diverge. So look for weakness, but no parity yet.

Unless, of course, the unexpected happens.

Editor's Note: This article was originally published on Real Money at 12 p.m. on Nov. 16.