The weaker euro pushed bills at the pump even higher

The euro is worth as much as the dollar for the first time in twenty years. That’s remarkable because the euro is generally stronger than the dollar. Because of the weaker euro, we pay more for oil, because it is settled in dollars. And we will feel it at the pump.

There are two reasons why the euro is becoming less valuable, while the dollar is doing the reverse. First, there is the fear of a recession (two consecutive quarters in which the economy shrinks) in the eurozone. If that happens, European companies will receive less money and their stock prices will go down.

In order to be ahead of that, investors are already selling part of their euros while they are still earning from it. In addition, interest rates in the US are currently higher, which makes it more attractive to store money in the US than in the EU. Therefore, more dollars are purchased.

The combination of these two causes the euro to lose value, while the dollar becomes stronger.

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