The EUR/USD hit parity for the first time since 2002, which means you can convert U.S. dollars to Euros at a near 1-1 rate.

What’s the big deal? The Euro was trading around $1.15 back in February and has plummeted since the Russian invasion.

Reasons why the EUR/USD is falling:

• The U.S. is raising interest rates while the E.U. hasn’t. Higher interest rates tend to attract more global investors, which increases the demand for country raising rates.
• The U.S. dollar is seen as a safe-haven currency. Investors sold off the Euro as the Russian invasion progressed — moving towards safer assets like the U.S dollar.

A country with a stronger currency is generally seen as a stronger economy. The U.S. grew faster in the first quarter of 2022, and inflation was slightly lower than the E.U. in May.

The European Union is in a tough position with the Russia/Ukraine war impacting the region — which is at risk of escalating.

Russia is threatening to reduce gas flows to Germany and other regions — making their gas shortage even worse.

How this impacts you: A strong U.S. dollar relative to the Euro makes U.S. goods more expensive — but it also makes European goods cheaper…

• Your purchases: By reaching parity, goods from the European Union are ~15% cheaper than at the start of the year.
• Your stocks: U.S. companies that rely on global exports could see a slight decline in sales as U.S. goods become less competitive.