The euro has traded near parity with the US dollar only a few times since its introduction in 1999. In 2022, it reached this level due to Russia’s invasion of Ukraine sparking an energy crisis and recession fears. Now, some analysts predict the euro could reach 1:1 ratio again this year.
Market experts point to US plans to restrict trade with European export-oriented economies as a key factor. The European Central Bank has responded by cutting interest rates aggressively in anticipation of these restrictions. The US has already raised tariffs on Canadian, Mexican, and Chinese imports, and threatened to impose similar measures on the European Union. This would significantly impact Europe’s weak economy, which relies heavily on exports such as cars, chemicals, and luxury goods. As a result, many predict that the euro will soon reach parity with the dollar again.
Source: https://www.bloomberg.com/news/articles/2025-02-03/why-euro-and-us-dollar-are-getting-close-to-parity-again-eur-usd