The exchange rate of the euro has dropped to equivalence with the dollar for the first time in nearly 20 years. What are the reasons behind the decline of the European currency? The euro is facing pressures due to fears of an economic recession in the Eurozone amid the ongoing energy crisis, as energy resource prices continue to rise in Europe.
Regarding the reasons for the decline of the single European currency, experts pointed to unprecedented increases in inflation rates in European countries, which have driven investors to flee to the dollar as a "safe haven" and a reliable means of protection against inflation. Additionally, the uncertainty regarding the monetary policy of the European Central Bank contributes to the euro's weakness, as it is expected to raise the current zero interest rate only in July. Experts also noted the issue of the rising exchange rate of the US dollar against other currencies in the past period, following the decisions of the US Federal Reserve (the central bank) to raise interest rates in the United States.
