EURO AT 4-YEAR PEAK AGAINST US DOLLAR AS EURO INFLATION HITS ECB’S TARGET

Wed 02 July 2025:

The euro increased to its highest since 2021 against the US dollar on Tuesday after annual inflation in the eurozone hit the European Central Bank (ECB)’s target of 2%.

The currency was up 0.1% against the dollar to 1.1821 as of 0930GMT, the highest since August 2021.

The rise was due to the confirmation of the euro area’s annual inflation as a 2% medium-range target of the ECB.

The figure matched the European Central Bank’s (ECB) target range and market expectations.

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The biggest upward driver of inflation was services at 3.3% in June, followed by food, alcohol & tobacco at 3.1% and non-energy industrial goods at 0.5%.

On the other hand, energy prices were the biggest downward contributor to the inflation, down 2.7% annually.

When the euro was introduced in 1999, the euro/US dollar exchange rate was 1.17, but the currency rapidly lost value against the dollar, falling to 0.82 in October 2000, but gaining between 2002 and 2008.

The exchange rate reached a record high of 1.6 in 2008, and while it enjoyed a high rate for a while, parity declined to 0.96 in September 2022, its lowest in the last two decades and below the 1.0000 parity level.

-Source: AA

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