The common European currency has been extremely sensitive in recent days, albeit on the hint of bad news coming out of the economy. All it takes is a slight deterioration in investor sentiment or increased fears of a coming recession for capital to spill over from the euro into the US dollar.
The euro is at its weakest level since 2002
The euro fell to its weakest level against the US dollar since 2002. Since the beginning of this year, it has already lost about a tenth of a percent, when during Wednesday’s trading it reached 1.0238 dollars per one euro. Some experts estimate that the euro is heading towards parity against the dollar, where it last hovered twenty years ago.
Euro weakens due to Germany and Italy
The common European currency is weighed down by a number of factors that are sending it downwards. These include the growing vulnerability of Germany, which is dependent on Russian gas supplies, or the worsening debt situation in Italy, which has led the European Central Bank to prepare a new instrument to prevent the fragmentation of the eurozone and the onset of a new debt crisis.
“All of this suggests that the euro will continue to weaken and markets will be watching its development closely. We will see parity (against the dollar) and it is only a matter of time before that happens,” Jordan Rochester, an analyst at Nomura Securities, told Reuters.
