The euro is at its lowest level in two decades as recession fears are spreading across the eurozone.
The currency’s decline this year has pushed it closer to dollar parity for the first time since the euro’s creation in 1999.
On Tuesday’s trading the euro loss around 1.3% to hit $1.029. The accumulated decline now sits at 9% of its value against the dollar since the start of the year.
Euro zone inflation hit a record 8.6% in June, forcing the European Central Bank to anticipate coming hiking interest rates for the first time in 11 years at its July meeting.
Rising prices in Europe are fueled by high energy prices over recent months, mostly driven by the war in Ukraine that started late February and has no clear signs of a solution soon.
Natural gas prices in Europe keep climbing as countries and markets are still exposed to Russian supply cuts.
According to CNBC, the July Sentix Economic Index on Monday showed investor morale across the 19-country eurozone has plunged to its lowest level since May 2020, pointing toward an “inevitable” recession.
Growing fears of a recession may limit the European central bank’s capacity to tighten monetary policy.
The dollar’s strength continues as the Federal Reserve is ready to keep an aggressive rate hike regime.