Euro's lowest in a year... '1 euro = 1 dollar' official threat

The value of the euro against the dollar has been falling day after day since former U.S. President Donald Trump succeeded in regaining power.

On the 12th local time, the exchange rate fell to $1.0595 per euro on the international foreign exchange market, the lowest since November last year.

The euro has fallen about 3% in the five trading days since Trump's election on forecasts that a U.S. introduction of universal tariffs would hurt the eurozone's export economy and widen the gap in interest rates between the two sides.

Bloomberg said 10 investment banks have lowered their euro outlooks in the past week, with weaker euro bets in the futures market the biggest in three years.

Many investment banks recommend selling the euro quickly, believing that the euro will fall below $1 if Trump takes office in January next year and begins his protectionist trade policy in earnest.

September 2022 was the last time the euro was below $1 in value.

George Sarabelos, a foreign exchange market analyst at Deutsche Bank, argued that the euro could fall below $0.95 if Trump's policies are fully and quickly implemented without a response policy from Europe and China.

Neil Mehta of RBC Blue Bay Asset Management said, "The (upper and lower house) sweep of the U.S. Republican Party has not yet been reflected in the price," adding, "If Trump is very hawkish, parity (1 euro = $1) will become a reality." "There is a lot of uncertainty in the European economic outlook," he said.

ECB figures also worry that a trade dispute would put the dollar under further upward pressure and stoke inflation in both the U.S. and Europe.

Robert Holtzmann, governor of Austria's central bank, the ECB's monetary policy committee, noted that approaching parity could lead to higher energy import costs, making it difficult to meet the euro zone inflation target of 2%.