Why the euro has dropped?

So far this year, the euro has fallen about 12% against the dollar.

Within its history, the euro has become the second-most looked at currency in global currency reserves, with the euro/dollar having the biggest daily exchange of any currency in the worldwide market.

With a conflict on the eurozone’s border, an unstable electricity supply and surging gas prices, the pressures on the euro ultimately became so intense that it momentarily fell below parity with the US dollar, a one-to-one exchange rate, on Wednesday.

All these aspects make the eurozone more vulnerable to recession risks and explain why the euro is under pressure right now.

The euro has spent very little time below equality since its creation in 1999. It did so previously from 1999 to 2002, when it hit a record low of $0.82 in October 2000.

The euro’s dramatic fall has coincided with the dollar’s strengthening (which has been one of the safest locations to keep money for years) against nearly every major international currency.

At its July 21 meeting, the European Central Bank is likely to begin raising interest rates. In June, the Federal Reserve raised interest rates by 75 basis points. Some major banks predict a eurozone recession as early as the third quarter.

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