The euro deviates from parity with the dollar.
In intraday trading on Wednesday, the Euro momentarily fell below parity with the US dollar after U.S. Department of Labor data revealed that the Consumer Price Index (CPI) rose 9.1% from a year ago in June.
On Wednesday, the exchange rate fell below 0.9999 dollars for the first time since December 2002.
According to Der Spiegel, a German weekly news magazine, the U.S. inflation figures, which reached a new four-decade high, encouraged investor speculation of more aggressive interest rate hikes by the Fed, which caused the U.S. currency to appreciate.
Since the start of the year, the euro has lost around 12 percent of its value versus the dollar, and the weaker dollar and the deteriorating outlook for economic growth in the euro area are mostly to blame for this decline in the common currency of 19 member states of the European Union.
The Federal Reserve started its tightening cycle in March by raising its target federal funds rate by a quarter percentage point from near zero. It raised the rate by 0.5 percentage points in May. The rate was aggressively increased in June by three-quarters of a percentage point, the highest increase since 1994.
