Euro Dips Below Parity With The Dollar Due to The Energy Crisis and Ukraine War

Euro by Ibrahim Boran - Unsplash
Euro by Ibrahim Boran - Unsplash

The euro might face more declines as the energy crisis and war wreaks havoc on the currency, according to an investment strategist. 

Meanwhile, the US dollar will continue to soar as Federal Reserve further hikes interest rates.  This week, the euro slipped below parity with the dollar.

“The ECB has done some tightening, but they are still doing bond purchase program,” AJ Oden, senior investment strategist at BNY Mellon Investor Solutions, told Insider. “The Fed is doing the opposite; we’re pulling money out of the system. The probability of recession is just much higher in Europe.”

Europe’s worsening energy crisis and ongoing  Russia’s war on Ukraine have led to investors shedding euros and flocking to the dollar, he explained. 

“Inflation’s already at double digits in Europe, and as we move into the winter there’s concern Russia could tighten more in natural gas, and energy prices could pop up again,” he said. 

Given its status as the global reserve currency, the greenback will maintain course and stay near 20-year highs, Oden noted, and with the Fed signaling further rate hikes, that strength against the euro will continue.