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Parity euro dollar

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Euro falls to parity with the dollar on ECB’s sluggish inflation response

The Euro is still not getting back on its feet and continues with the slump of the last months. The quotation of the main European currency against the dollar continues to weaken this Tuesday and loses parity with the ‘greenback’, something that has not happened since 2002, due to the growing fears that the eurozone will enter into recession dragged by the consequences of the war in Ukraine.

Today, the euro’s exchange rate with the U.S. currency fell to exactly one dollar, its worst exchange rate since December 2002, 0.4% below the price at the close of the previous session.

So far this year, the euro has accumulated a depreciation of around 12% against the dollar as a result of the increased fear that the eurozone may end up entering recession due to the impact of the war in Ukraine on prices and markets, as well as the early start of the US Federal Reserve’s (Fed) tightening of its monetary policy compared to the European Central Bank (ECB).

In fact, while the ECB has announced that it will undertake its first rate hike since 2011 next week, with a hike of 25 basis points, the Fed began the normalization of its monetary policy last March, with a hike of 25 basis points, followed by hikes of 50 and 75 basis points, respectively, in the following two meetings.

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