On Wednesday, 13 July, the value of euro currency dropped below the value of US dollar for the first time since December 2002.
Euro exchange rate dropped to 0.9998 USD/EUR after the publication of data that indicated that annual inflation in the US increased to 9.1% in June, reaching the highest level since November 1981. This data served as additional stimulus for the US Federal Reserve System to increase the base interest rate, making US dollar less attractive to investors.
As previously reported, on Tuesday the value of euro became equal to US dollar.
Euro exchange rate has been in decline for some time as a result of concerns regarding the possible recession in Eurozone.
The US Federal Reserve System’s policy in rapidly increasing the base interest rate increased US dollar’s value and created pressure on euro, since European Central Bank focuses on tighter monetary policy and at a slower pace.
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Worries about Eurozone’s economy are further increased by the possible energy crisis, which could come as a result of a complete ban of Russian energy resources and difficulties finding alternative sources.
The announcement from the European Commission regarding the planned downgrade of Eurozone’s economic outlook and increase of inflation outlook for this year.