The US dollar has flipped the euro briefly today before returning to newly-found parity between the two currencies. The decline in EUR\/USD comes amid a broader drawdown in the European markets due to fears of further interest rate hikes and recession.<\/p>\n
The euro reached parity with the US dollar for the second time in just a few months as European hawkish monetary policy signals from the European Central Bank (ECB) augmented recession fears. The euro initially broke below the $1 mark for the first time in two months, before returning to parity shortly afterward. Last month, the euro hit parity with the US dollar for the first time in 20 years.<\/p>\n
The drop in EUR\/USD comes as ECB policymakers suggested aggressive interest rate hikes will most likely continue, adding to investors\u2019 concerns that the European economy will fall into recession. The pan-European Stoxx 600 index was also down more than 1% in the morning hours.<\/p>\n
Joachim Nagel, President of the Bundesbank told a German news outlet the ECB must maintain its hawkish approach despite growing recession risks in Germany. Minutes from the last ECB\u2019s policy meeting will be released on Aug. 25, while investors will also closely monitor the eurozone flash Purchasing Managers\u2019 Index (PMI) on Tuesday.<\/p>\n
\u201cFor the Fed, getting inflation down towards targets is non-negotiable. Chair Powell is likely to state that the Fed will raise rates as far as it takes, and for as long as it takes, to lower inflation.\u201d<\/p>\n
\u2013 Steve Englander, Global Head of G10 FX Research and North America Macro Strategy at Standard Chartered<\/cite><\/p>\n While a recession is likely for all global economies, it is safe to say that the US is better positioned to face those headwinds compared to Europe. One of the main reasons for this is Europe\u2019s energy crisis which is likely to exacerbate as the war in Ukraine worsens.<\/p>\n Analysts believe Europe should brace for a difficult winter as it continues to cope with significantly lower imports from Russia, the continent\u2019s biggest gas supplier until recently. Russia reduced its flows through the Nord Stream pipeline by 80% to hurt Germany and other European countries for supporting Ukraine.<\/p>\n On the other hand, inflation in the US eased to 8.5% in July according to the most recent CPI print. But US Treasury Secretary Janet Yellen said last week that the country\u2019s inflation remains \u201cunacceptably high\u201d and bringing it down should be a top priority.<\/p>\n This article originally appeared on The Tokenist<\/i><\/p>\n Sponsored: Tips for Investing<\/b><\/p>\n A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.<\/p>\n Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses,\tconsider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.<\/p>\nEurope in Worse Position than the U.S. as Energy Crisis Exacerbates<\/h3>\n