Euro hits US Dollar parity for the first time in 20 years

The euro has hit parity with the United States dollar and stock markets fell as the prospect of further central bank tightening and worries about the health of economies worldwide unnerved investors.

By 10:00 GMT on Tuesday, the euro was at a low of $1, its weakest in more than 20 years.

The US dollar’s role as the go-to currency for investors worried about the economic outlook has been boosted in recent weeks, with the US currency roaring to two-decade highs against multiple currencies.

The euro has been particularly vulnerable given the effect of a continuing spike in natural gas prices on the regional economy and the war in Ukraine. Meanwhile, the European Central Bank has been behind rivals in raising interest rates.

Mizuho analysts said the move towards parity was happening as “recession in the eurozone is priced in”, and said the backdrop suggested little to improve risk sentiment.