As we know that Euros are accepted in 19 countries and aftermath of impeding economic crisis due to war in Euro-Asian region. There was a slight slip in the currency values. In addition to that Federal Reserve Bank has added fuel to fire.Post-Pandemic Euro slipped its value by 1.2times against USD. The price of any currency in a economy is determined by supply and demand factors. Determined by inputs like, Central Bank Policy and local demand for imports and foreign assets (Foreign Reserves). Inflation has not been bound to India, it can be seen in major developed countries like US by 9.1%, Europe by 8.6%.
The Federal Reserve responded to the rising prices by raising the interest rates this year in order to slow down US money supply growth. This has attracted the portfolio investors to shift their aspirations to United States. The European Central Bank, however, has been less aggressive in tightening policy even though the inflation rate as high as 22% in some European countries. This has caused the value of the euro to slide against the dollar as currency traders witness, or at least expect the supply of euros in the market rising relatively to the supply of dollars. Importing energy has also been a factor to downward spiral of Euro, as Russia has shifted its economic policies and abandoned the acceptance of USD to trade earth minerals. It has squeezed further in Euro region. US Federal Reserve continues to raise interest rates; this is likely to exert further pressure on Euro