The local unit, which late last week hit a record high of 70 euro cents, remains on track to hit and hold above one US dollar by June, HiFX senior consultant Derek Mumford says.
But ongoing debate over sovereign debt in Europe will weaken the euro further and hold the Australian dollar back from touching a 27-year high against the US currency.
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"Parity is certainly possible within the next six to nine months," Mr Mumford says. "If anything, a weak euro and a potential flight to quality will hold the Aussie down against the US dollar.
"There's enough uncertainty in markets and of course the sovereign debt issues in the euro... that will certainly undermine confidence because of the huge deficits governments are running up."
The euro has been weakened in recent weeks by ongoing concern about the scale of Greece's debt and how the quickly European Union (EU) can help repair it.
Greek bailout agreed
On Sunday, finance ministers from the 16 EU countries agreed to aid Greece over three years with a 30 billion ($A43.59 billion) financing program.
Greece's national debt is running at 113 per cent of its gross domestic product.
The Aussie dollar jumped one US cent on the news to open Monday's local trade at three month high of 93.85 US cents, while the euro gained three US cents.
But uncertainty quickly returned after a German official said his country's parliament would need to approve Germany's share, the largest at 8.4 billion euro ($A12.26 billion).
Meanwhile, the IMF on Thursday announced a commission would visit Athens next week to discuss potential aid polices with Greek officials.
The uncertainty has left the local dollar oscillating around in a tight range around 93 US cents, failing to break 94 US cents.
Greece is not the only headwind facing the local dollar as it pushes towards parity, with fears growing China's recent red-hot economic growth will develop into a bubble, Mr Mumford said.
Fears of China slowdown
China is currently the Australian export sector's biggest customer and an economic slow down in China would reverberate into the Australian economy.
On Thursday, China said its economy grew at 11.9 per cent over the year to March, a growth rate that exceeds that of all western nations.
"There's potential for China to start tightening its monetary policy and that would slow down that market which, in can be argued, is developing into a bubble economy there," Mr Mumford
said. "That could undermine the Aussie."
But Nomura Australia chief economist Stephen Roberts said a tightening of Chinese policy would be viewed as a responsible move which would be consistent with a rise by the local unit above one US dollar by 2010 or 2011, he said.
"When you look at the previous phase of monetary policy tightening in China two or three years ago, it was largely when we had massive terms of trade.
"If anything, it ran in tandem with (an appreciating) Aussie dollar.
"This is returning, the terms of trade levels... so the the paradox is people will look at Chinese policy moves and see it as a reason why they can sustain its growth rate longer."
