EUR/USD finally broke below parity
EUR/USD finally broke below parity during the American trading hours on Thursday and the pair was last trading at its lowest level since December 2002 at 0.9975, losing 0.8% on a daily basis. The relentless dollar strength continues to weigh heavily on EUR/USD. Following the mixed macroeconomic data releases from the US, the US Dollar Index surged to a multi-decade high above 109.00. Earlier in the day, the data published by the US Bureau of Labor Statistics revealed that the annual Producer Price Index jumped to 11.3% in June from 10.9% in May.
Meanwhile, Wall Street's main indexes trade deep in negative territory after the opening bell, reflecting the risk-averse market environment. It's also worth noting that the widening policy divergence between the European Central Bank (ECB) and the Federal Reserve forces EUR/USD to stay on the back foot. According to the CME Group FedWatch Tool markets are now pricing an 88% probability of a 100 basis points Fed rate hike in July. On the other hand, the ECB is still trying to decide if it should hike the policy rate by either 25 or 50 basis points in July.