08/03/2022
Euro on parity with Dollar and could go down as low as Euro 0.95 on the Dollar.
“Yes. It’s a psychological threshold for the market. The first time the euro fell to parity with the dollar was in December 1999, not even a year after its inception. Just like now, analysts then pointed to a widening in the spread between German and US bond yields and stronger US growth. It was a dent in the pride of Europeans, who saw the common currency as an important political project and a rival to the dominant dollar. Today, the euro is considered one of world’s key currencies for transactions and reserves, though hitting parity is still symbolic. For the financial markets, currency traders expect turbulence around the 1:1 level given that billions of euros in options bets are linked to that big line in the sand.”
As the US economy went into meltdown during the 2008 global financial crisis, one euro was worth about 1.6 times the US dollar. Now a combination of Europe’s front-line exposure to Russia’s war in Ukraine and the European Central Bank’s tardiness in raising interest rates have driven it to par...
