Euro declined to a fresh 20-year low level against US dollar on Monday, with the US Federal Reserve’s monetary tightening and Russia’s war on Ukraine which threatens energy supply for Europe.
The euro against the dollar fell to as low as $1.0053 at 9.49 a.m. EDT (1349GMT), its lowest level since Dec. 06, 2002, according to official figures.
The dollar index, which is used to measure the value of the US dollar against a basket of six foreign currencies that include the British pound, euro, Swiss franc, Japanese yen, Canadian dollar, and Swedish krona, was up 1.1% to 108.19, posting a new 20-year record high level.
The Fed has made a total of 150 basis points of rate hike since March to tame record-high inflation, pushing the dollar index higher. The European Central Bank (ECB), on the other hand, has not yet made a change in interest rates.
The ECB is expected to make a rate hike of 25 basis points on July 21, while the Fed is anticipated to bump the rates aggressively by another 75 basis points on July 27.
The war in Ukraine continues to pose a risk for the eurozone, while Germany, the bloc’s biggest economy, potentially faces a permanent halt of Russian natural gas flow.
Both American and European economies are mired with recession fears.