The euro slid back below parity with the U.S. dollar Monday, a clear sign of the diverging fortunes of the European and U.S. economies currently
The euro fell as low as $0.9992 before recovering to $1.0004, according to FactSet.
Tweet on Euro v Usd parity
The Euro fell below parity with the U.S. dollar on Monday!
As the Eurozone continues to face rising inflation while it prepares for a potential energy crisis this winter, amid concerns of Russia squeezing supply of natural gas @wsj reports pic.twitter.com/bpqKbdNmU6
— The_Journalbiz (@the_journalbiz) August 22, 2022
The currency briefly fell below parity in mid-July for the first time in 20 years, but rebounded in recent weeks as the dollar’s rally lost steam.
Many investors expected the euro’s rebound to be short-lived, as Europe faces an energy crisis and rising odds of a recession.
The weaker economic outlook leaves the European Central Bank with less room to raise interest rates compared with the Federal Reserve, where the economy remains on relatively solid footing.
- Higher rates typically boost currencies by drawing in investors seeking yield.
In recent days the dollar has sprung back to life, not just against the euro but versus a broad swathe of global currencies.