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The Euro Suffers Its Biggest Drop-Off in 20 Years

Image Source: nadia_if / Shutterstock

As gas prices continue to rise and consumer confidence drops, not to mention the ongoing war in Ukraine, the European economy is taking a sizable hit. Recession fears are at an all-time high, and as of this morning, those fears are beginning to directly affect Europe’s primary currency.

Today, the value of the Euro suffered its biggest drop-off in at least 20 years, sliding by 1.3% to a USD equivalent of $1.029. Back in June, inflation around the EU had skyrocketed to around 8%, prompting the European Central Bank to announce upcoming interest rate hikes, the first such hikes in over a decade. Investor morale is currently at an all-time low, and with fears of recession looming and consumer sentiment souring, it’s possible that an interest rate increase may not be able to stave off the inevitable.

The actions of the ECB mirror those taken and planned by the United States Federal Reserve, though unlike the euro, investors still see the US dollar as a safe zone for investments. Of course, as announced by Federal Reserve Chair Jerome Powell, who raised interest rates by 0.75% last month, there will likely be more rate hikes in the not too distant future, so whether the dollar remains the international investment currency of choice remains to be seen.

Image Source: nadia_if / Shutterstock

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