What does EUR/USD parity mean for US economy?

For the first time in almost 20 years, the US dollar is nearly equal in value to the Euro. This may sound good for the dollar, but it could be harmful for some sectors as well.

If the dollar becomes exceptionally strong, it could harm the business for US companies, because their goods could become too expensive for foreigners to buy. In turn, if sales of US exports decrease, that could further slow down an already stumbled US economy.

On the other hand, a strong dollar helps US citizens who are traveling in Europe, giving them additional buying power.

The weakening Euro has been getting closer to parity with the US dollar since mid-2021. A very robust June jobs report on Friday, and analysts’ expectations of a further 0.75 percentage point hike by the Fed in July are making the dollar stronger than expected.

Generally speaking, the Euro has been higher than the dollar. But there has been a weakening and the Euro is now more vulnerable due to the Russian invasion in Ukraine and that is leading to higher fuel prices, natural gas, and agricultural prices. The US dollar was notably stronger in April 2022 than it was in April 2021.