FX Risk Advisory: Euro hits parity (1 EUR = 1 USD)

Key Takeaways

• The euro hit parity with the US dollar on July 12th, 2022, a level not seen since December 1999; it is worth nothing that parity was nowhere near the bottom then, as the currency would subsequently fall close to another 20%.
• The euro is the most actively traded currency by SVB tech clients in the US, with 2 of 3 trading in the common currency; Clients who are funding euro expenses with USDs are benefiting from longer runways, while those with euro revenues may be finding some erosion in top-line revenue and profits.
• The drivers behind euro weakness - central bank policy lagging and deteriorating economic fundamentals - are still in place, suggesting future uncertainty ahead.