The Euro Is Nearing Parity With the U.S. Dollar
The price of the euro is weakening, causing some to speculate whether it will reach parity with the dollar by year-end.
Multiple Factors Are Weakening the Euro
As of Sunday, May 22, the euro was valued at $1.06, nearly on par with the U.S. dollar. Earlier this month, it fell as low as $1.035.
Various factors are at play. Global events like the Russia-Ukraine war, economic sanctions, supply chain challenges, rising inflation, and a slowdown in China’s economy could all be playing a part. And although those issues are causing economic uncertainty, the trend seems to be strengthening the U.S. dollar as investors turn to a trusted asset.
Additionally, a few events—like the ongoing European energy crisis—could be weakening the euro in a more direct fashion.
Will the Euro Reach Parity or Recover?
Some experts suggest that the euro could reach parity with the dollar by the end of the year if its value continues to weaken.
In a recent report, HSBC said that it “see[s] the euro-dollar moving to parity in the year ahead” and that it is “hard to see a silver lining” that might result in a better outcome for the European asset.
Others suggest that dollar parity is far from guaranteed. One JPMorgan executive told CNBC last week that dollar parity would require a “downgrade in growth expectations” comparable to the aftermath of the Ukraine invasion. He called dollar parity a worst-case scenario.
An expert from BMO Capital Markets similarly told CNBC that the euro and the dollar would only reach parity as the result of “policy inertia” from the European Central Bank over the course of the summer.
The euro has only been so close to dollar parity a few times in the past: in 1999 when it fell below the dollar’s value; in 2002, when it rose past the dollar’s value; and between 2015 and 2017 when it touched $1.04.
Investing in Foreign Currency Can Be Profitable
History suggests that the euro could recover from its current low price, but regardless of the outcome, forex investors have an opportunity.
Purchasing the euro before it recovers could be a savvy decision for investors if it does indeed recover. Alternatively, buying the U.S. dollar could be advantageous if the euro declines further in value.
At Payset, we offer foreign currency accounts with support for the U.S. dollar, the euro, and more than thirty other international currencies—giving you the chance to execute rapid trades.
Frequently asked questions
What is a multi-currency account/virtual IBAN?
A Payset multi-currency account allows you to receive money in 34 different currencies and send money in up to 38 currencies, all within the same account.
You can deposit and withdraw funds, convert currencies at competitive exchange rates, and hold your chosen currencies to capitalize on market movements.
A Payset multi-currency account allows startups and business owners to receive payments from clients virtually anywhere in the world and pay suppliers, staff, and contractors quickly and affordably in their chosen currency.
- Funds can be deposited and withdrawn from the account for a small fee.
- Account holders can send and receive money with other Payset users for free.
- Depending on your region, you can use various payment networks from your Payset account, including SWIFT, SEPA, ACH, Fedwire, Faster Payments, BACS, and CHAPS.
- Once you register an account, you will be provided with a Virtual IBAN (International Bank Account Number), which makes all of these transfers easy.
- We provide you with local payments and collections. For example, transactions in USD, EUR, CAD, and GBP are processed through the local payment networks, which is far cheaper and takes minutes as opposed to days
Are there limits on the amount of money I can send and receive?
No, there are no transaction limits on Payset multi-currency accounts.
However, higher-volume transactions may require additional anti-fraud verification. If you plan to make a large transaction, contact us in advance to avoid verification delays.
How is Payset regulated?
Payset is regulated as an authorized Electronic Money Institution by the UK Financial Conduct Authority. Our activities are also regulated by the Payment Services Regulation 2017 and the Electronic Money Regulation 2011 (SI 2011/99).
How do I add money to my account?
How do I send money from my account?
Once you have opened your verified IBAN account and added money to a balance, transferring funds is simple.
Simply log in into your account and add a beneficiary, then simply “make a transfer” in your preferred currency to that beneficiary.
Information contained in this publication is provided for general education and information purposes only and should not be construed as legal, tax, investment or other professional advice or recommendation, or an offer of, or solicitation for, any transactions or any other actions (or refraining therefrom); This material has been prepared without taking into account any particular recipient’s financial objectives or situation. We make no warranty, guarantee or representation, whether express or implied, as to the completeness or accuracy of the information contained herein or fitness thereof for a particular purpose; Use of images and symbols is made for illustrative purposes only and does not constitute a recommendation or advice to take or refraining from any action; Use of brand logos does not necessarily imply a contractual relationship between us and the entities owning the logos, nor does it represent an endorsement of any such entity by Pay Set Limited, or vice versa; Market information is made available to you only as a service, and we do not endorse or approve it; Any reference to past performance, predicted returns, or likelihood performance scenarios may not reflect actual future performance and certainly do not guarantee future outcomes.
