U.S dollar almost equal to Euro

[Ultegra134]

For the first time in 20 years, the U.S. dollar has been surging so much that the Euro sinks towards parity with the Dollar, currently trading at €1/$1.01, being almost equal. This is a threat to both Europe and USA, since imports are now much more costly for Europe. The exchange rate is also driving oil prices up, since purchasing a barrel of oil valued at $100, now costs €98-99 for Europe, while a few months ago, the same barrel would cost €80-90 at most.

Goldman Sachs warned that the Eurozone is on the edge of recession, especially with Russia's decision to cut CNG supplies to Europe, resulting in huge surges in prices.  While the war in Ukraine hasn't affected USA as much as it has Europe, it has magnified oil and gas prices, punishing European consumers with the surging living costs.

What are your thoughts? Will Euro's value fall lower than the U.S. Dollar? One thing is certain though, we're going to go through a tough time in the very near future.
Sources:
https://fortune.com/2022/07/07/us-dollar-euro-nearly-equal-value-economy-inflation/
https://www.ft.com/content/48c7041f-1fa4-42ee-99f6-4a5955668fb6

Edit: Thanks LoyceMobile, I meant to say that U.S. exports are much more costly for Europe, bad phrasing.

[LoyceMobile]

exports are now much more costly for Europe.

Importing is more expensive.

Meanwhile, the official interest is still negative.

[Husires]

Politics in the eurozone has become controlling the economy. If winter comes and electricity costs rise, we will see a price of the euro much lower than the dollar.
Brexit, the Ukrainian war, and a lot of difficulties in the eurozone made the currency in its weakest state, not forgetting the rise in interest rates in America that made the dollar stronger and the confiscation of Russian assets with the increase in military spending.

[jackg]

It was probably expected by has been delayed by quite a bit imo.

Most currencies have ended up being devalued against the dollar as the dollar has higher inflation than them (based off estimates) so something like this was going to happen soon (just markets pressing back in their natural directions).

It's a good reminder to not hold too much fiat unless you need to, a few years ago $1.50=€1.24=£1, now both currencies have dropped compared with the dollar.

[Gozie51]

Somehow it was looking as if the increased inflation rate in US would have an adverse effect on the economy and reflecting on the dollar but this has not been so. The Biden administration has been able to strengthen the dollar against most currency paired with and I have noticed the Euro exchange rate with the dollar, now having little or no difference unlike in the past. The economic indices of the US economy is still favourable to dollar.

[Moneyprism]

What are your thoughts? Will Euro's value fall lower than the U.S. Dollar? One thing is certain though, we're going to go through a tough time in the very near future.

maybe in the next few years the value of the euro against the USD will decline, because there are several reasons, firstly the global geopolitical situation, secondly inflation, and thirdly import problems,,, but in my opinion this is only in the next few years,, the value of the euro will definitely recover and will get stronger

[Lucius]

Goldman Sachs warned that the Eurozone is on the edge of recession, especially with Russia's decision to cut CNG supplies to Europe, resulting in huge surges in prices.  While the war in Ukraine hasn't affected USA as much as it has Europe, it has magnified oil and gas prices, punishing European consumers with the surging living costs.

According to statements that can be read and heard these days, central banks have started sending warnings about a very likely recession in the next year, which should not surprise us considering how the situation in which the EU finds itself when it comes to oil and gas. Today I read an article in a local newspaper that in Germany they have already started to implement energy-saving measures by turning off public lighting and traffic lights, reducing the heating of water in public swimming pools to the point that in some districts they have completely turned off the hot water in schools and gyms.

For the EU (especially some countries), the euro is now proving to be a bad solution, and the ECB is under fire from all sides, even from the German central bank and their governor.

The days of European Central Bank teamwork heralded by Christine Lagarde may be ending as a Bundesbank warning shot on her crisis policies evokes its prior role as a thorn in the presidency’s side.
The public salvo on Monday by German official Joachim Nagel, cautioning on the dangers of an anti-turmoil tool, is raising the temperature just as discussions intensify on a key pillar of the ECB chief’s plans to raise interest rates.

I look at the whole situation from another perspective, which is that exactly what is happening now is part of the war being waged in Ukraine - and that the EU will pay dearly for all the sanctions. I will not say that it should have been different, because one should always side with the one who is attacked and who is weaker, but such actions often have a high price, and it seems that everyone will have to pay it.

[Gyfts]

Somehow it was looking as if the increased inflation rate in US would have an adverse effect on the economy and reflecting on the dollar but this has not been so. The Biden administration has been able to strengthen the dollar against most currency paired with and I have noticed the Euro exchange rate with the dollar, now having little or no difference unlike in the past. The economic indices of the US economy is still favourable to dollar.

Inflation is everywhere now due to the war. The U.S. inflation problem was partly due to money printing, but plenty of European countries themselves had borrowed too much from themselves in 2020 when they shut down their economies for COVID restrictions so they were bound for some inflation regardless of the war. The current supply chain issues and product shortages just compound a much more complicated issue.

This also highlights how important energy is. You can completely tank a currency by sending energy prices higher because it makes the country's ability to operate (ie ability to produce economic output) more expensive.

The revulsion I had for people, particularly the green climate change activists, who argued that the only effects of the war on Europe for countries choosing to avoid Russian oil was increased prices at the pump. Well, Europe is finding out that isn't particularly the case.

[BCwinning]

Somehow it was looking as if the increased inflation rate in US would have an adverse effect on the economy and reflecting on the dollar but this has not been so. The Biden administration has been able to strengthen the dollar against most currency paired with and I have noticed the Euro exchange rate with the dollar, now having little or no difference unlike in the past. The economic indices of the US economy is still favourable to dollar.

Inflation is everywhere now due to the war. The U.S. inflation problem was partly due to money printing, but plenty of European countries themselves had borrowed too much from themselves in 2020 when they shut down their economies for COVID restrictions so they were bound for some inflation regardless of the war. The current supply chain issues and product shortages just compound a much more complicated issue.

This also highlights how important energy is. You can completely tank a currency by sending energy prices higher because it makes the country's ability to operate (ie ability to produce economic output) more expensive.

The revulsion I had for people, particularly the green climate change activists, who argued that the only effects of the war on Europe for countries choosing to avoid Russian oil was increased prices at the pump. Well, Europe is finding out that isn't particularly the case.

I think it is primarily about all the money they printed just recently and the money they printed off in 2008 that I don't believe they ever pulled back in.
It is coming, there is no doubt in that, I'd say it is here now but everyone is still drunk on spending and the hangover hasn't quite hit yet.

[wxa7115]

What are your thoughts? Will Euro's value fall lower than the U.S. Dollar? One thing is certain though, we're going to go through a tough time in the very near future.
Sources:
https://fortune.com/2022/07/07/us-dollar-euro-nearly-equal-value-economy-inflation/
https://www.ft.com/content/48c7041f-1fa4-42ee-99f6-4a5955668fb6

Without a doubt we are going to see an Euro cheaper than the dollar soon, I have read predictions of the Euro reaching 0.95 or even 0.90 by the end of  the year and this is not going to be pretty at all, as not only they will have to deal with raising prices at almost every single market but people losing faith on the economy and spending even less money.

So while the world is on the verge of a recession I think things will get really bad at Europe and I will not be surprised if we begin to see some countries wanting to leave the union as it is already showing signs the experiment could fail.

[Gyfts]

Somehow it was looking as if the increased inflation rate in US would have an adverse effect on the economy and reflecting on the dollar but this has not been so. The Biden administration has been able to strengthen the dollar against most currency paired with and I have noticed the Euro exchange rate with the dollar, now having little or no difference unlike in the past. The economic indices of the US economy is still favourable to dollar.

Inflation is everywhere now due to the war. The U.S. inflation problem was partly due to money printing, but plenty of European countries themselves had borrowed too much from themselves in 2020 when they shut down their economies for COVID restrictions so they were bound for some inflation regardless of the war. The current supply chain issues and product shortages just compound a much more complicated issue.

This also highlights how important energy is. You can completely tank a currency by sending energy prices higher because it makes the country's ability to operate (ie ability to produce economic output) more expensive.

The revulsion I had for people, particularly the green climate change activists, who argued that the only effects of the war on Europe for countries choosing to avoid Russian oil was increased prices at the pump. Well, Europe is finding out that isn't particularly the case.

I think it is primarily about all the money they printed just recently and the money they printed off in 2008 that I don't believe they ever pulled back in.
It is coming, there is no doubt in that, I'd say it is here now but everyone is still drunk on spending and the hangover hasn't quite hit yet.

Well, all of the inflation was somewhat to be expected because of quantitative easing that happened years ago but it's not easy to tell exactly how much inflation is due to QE in combination with the COVID social welfare state countries decided to set up in combination with the war.

It's important to note that even in a bitcoin-only world that wars breaking out would cause you to lose purchasing power due to limited supply and either consistent or higher demand. But, price stabilization occurs once the war ends and production increases back up again, ie supply increases. When the war in Ukraine ends, it's not as if the purchasing power you have with EUR/USD or whatever currency will return back to pre-war days so your point is probably correct, but the real reason inflation is so absurdly high is because of the war so you can't minimize it's contribution.

[Ultegra134]

~Snip~

We're pretty much screwed then. It's fairly easy to claim that the sanctions against Russia have backfired by ruining our own economy, while Russia is flourishing by its increase in crude oil sales. Just think that if Germany is willing to take such drastic measures, which is a strong economy by itself, imagine what other countries will have to go through, such as Italy or Greece.

If I'm not mistaken, I read that Croatia will be adopting Euro from 2023, is it true? If I were you, I'd rather not join the Eurozone.

What are your thoughts? Will Euro's value fall lower than the U.S. Dollar? One thing is certain though, we're going to go through a tough time in the very near future.
Sources:
https://fortune.com/2022/07/07/us-dollar-euro-nearly-equal-value-economy-inflation/
https://www.ft.com/content/48c7041f-1fa4-42ee-99f6-4a5955668fb6

~Snip~

That sounds awful. Even if crude oil decreases in value in the future, we'll still be screwed due to the rate of exchange, rendering imports a lot more expensive than they used to.

[Hydrogen]

Prices of goods and services matter far more than exchange rates.

To say "the dollar is strong" is a misleading statement. Its only "strong" if its being exchanged for a foreign currency or perhaps precious metals. The average consumer will notice no difference.

I would contend a truly strong dollar would be reflected by prices in stores and gas pumps decreasing. Which is not something we're likely to see anytime soon.

A strong FOREX dollar reflects greater buying demand in contrast to other international currencies.

There is also another aspect to a strong dollar which implies reduced printing of the asset. That's the type of strength we need in the current day economy.

[Hispo]

Quite a bad timing for the Euro to lose strenght against the Dollar, specially since Europe is trying to reduce its dependence on Russian energy, ironically its most important ally to reach energetic stability is USA (through importation of gas shipments) and USA partners with the Americas. There is a posibility that USA may garbain with Venezuela to reach a deal to supply energy to Europe and USA itself in the mid-long run.

The EUR/VES pair is beneficial to Europeans since their currency could have a big demand here if a deal is reached.
Let us hope this unfortunate blow does not traduce into more suffering to the people of Europa.

[Lucius]

We're pretty much screwed then. It's fairly easy to claim that the sanctions against Russia have backfired by ruining our own economy, while Russia is flourishing by its increase in crude oil sales. Just think that if Germany is willing to take such drastic measures, which is a strong economy by itself, imagine what other countries will have to go through, such as Italy or Greece.

Such great dependence on someone or something is never good, because you never know when that someone will change the rules of the game and leave you stranded. The Russians planned everything long before they occupied Crimea, and regardless of all the warnings from the US that an even bigger war is coming in the future, the EU did nothing to become less dependent on Russian oil and gas.

If someone wonders why they pretended to be blind, then part of the answer lies in the fact that some of the most powerful people in the EU were deeply connected to the largest Russian companies, such as the former German chancellor Gerhard Schröder.

If I'm not mistaken, I read that Croatia will be adopting Euro from 2023, is it true? If I were you, I'd rather not join the Eurozone.

Unfortunately, this information is correct and it will be another big blow for my country, which, according to various independent experts, could not have chosen a worse moment to enter the Eurozone. However, the politics led by domestic politicians is fundamentally anti-national in all segments of life, and the people do not ask anything because it is easier to send a man to the moon than to hold a referendum. A few days ago, the finance minister resigned irrevocably for unknown reasons, and I don't find it strange considering that joining the eurozone will be an even bigger blow to the standard of all citizens - who would want to sit in a hot seat when everything goes downhill...

[Ultegra134]

We're pretty much screwed then. It's fairly easy to claim that the sanctions against Russia have backfired by ruining our own economy, while Russia is flourishing by its increase in crude oil sales. Just think that if Germany is willing to take such drastic measures, which is a strong economy by itself, imagine what other countries will have to go through, such as Italy or Greece.

Such great dependence on someone or something is never good, because you never know when that someone will change the rules of the game and leave you stranded. The Russians planned everything long before they occupied Crimea, and regardless of all the warnings from the US that an even bigger war is coming in the future, the EU did nothing to become less dependent on Russian oil and gas.

If someone wonders why they pretended to be blind, then part of the answer lies in the fact that some of the most powerful people in the EU were deeply connected to the largest Russian companies, such as the former German chancellor Gerhard Schröder.

Unfortunately, this information is correct and it will be another big blow for my country, which, according to various independent experts, could not have chosen a worse moment to enter the Eurozone. However, the politics led by domestic politicians is fundamentally anti-national in all segments of life, and the people do not ask anything because it is easier to send a man to the moon than to hold a referendum. A few days ago, the finance minister resigned irrevocably for unknown reasons, and I don't find it strange considering that joining the eurozone will be an even bigger blow to the standard of all citizens - who would want to sit in a hot seat when everything goes downhill...

Europe was too dependent on Russian oil, it goes without saying that sanctions were expected to backfire, Russia had taken that into account before starting the war, Europe on the other hand, not so much. Certainly, this seems to be the worst period to enter the Eurozone, in my opinion, joining the Eurozone despite the situation isn't a great idea. Some countries are way better off using their own currency. I'm expecting that the living cost will get more expensive for Croatia soon.

[Poker Player]

The problem of having a weak currency in the current context is that traditionally a weak currency favors exports, but if you have a weak currency and very rising costs, such as the cost of energy, what you gain on the one hand you lose on the other.

Germany has closed its trade balance with a deficit and that is very bad news.

Barring a miracle, I see a very dark future for the Euro. There is already talk of a two-speed Euro or what to do with the PIGS. If rates are not raised drastically, it is because of the consequences it could have on the southern countries.

[teosanru]

This clearly indicates that European economy is really struggling,  sanctions to the Russian government have really impacted euro badly. But I think it's USD actually which has got really strong recently almost all the currencies are struggling against the USD on the global level. But Russia stopping it's gas pipeline due to sanctions and stopping of other exports imports had really deteriorated Euro's value.

[edgycorner]

Politics in the eurozone has become controlling the economy. If winter comes and electricity costs rise, we will see a price of the euro much lower than the dollar.
Brexit, the Ukrainian war, and a lot of difficulties in the eurozone made the currency in its weakest state, not forgetting the rise in interest rates in America that made the dollar stronger and the confiscation of Russian assets with the increase in military spending.

Yea, this is a direct result of how both regions are managing their interest rate.
The Federal reserve hiked it while the European central bank kept it low.

Also, the market considers US dollar safer than Euro. So maybe people are pulling their money out of Euro market in lieu of what's coming?

and maybe civil wars in the Netherlands could be a factor too? The market reacts negatively towards any political fiasco.

[dansus021]

Sorry guys i dont really understand about this one, what will happen if USD equal to EUR is the EUR gonna collapsing or it will good to USD. because in my country itself USD is strong usually the rate about 14.400 per 1 USD yesterday is touch 15.000 per 1 USD