Europe on sale: What the euro's slide means for you

Think of it as Europe staging a giant 15 percent off sale.

With its economy slogging along at a near standstill last year, the euro has slid nearly 15 percent since May. That's offering travel and shopping bargains to U.S. consumers and anyone else paying in dollars.

But American companies selling or doing business in the euro zone face a profit squeeze as the currency's drop continues.

Fresh news Friday that the European economy is sluggish sent the euro even lower, to $1.20, down from about $1.40 in May and a high of roughly $1.60 in 2008 in the depths of the Great Recession.

Read MoreEuro zone manufacturing 'near-stagnant' in December

A widely watched manufacturing index showed that "euro zone factory activity more or less stagnated again in December, rounding off a year which saw an initial, promising-looking upturn fade away and stall in the second half of the year," according to Chris Williamson, chief economist at Markit, which publishes the index.

Since the 2008 financial crisis Europe's central bankers have debated a long list of measures to repair the damage to the euro zone's banks and engineer an economic recovery. On Friday, European Central Bank President Mario Draghi told a German financial newspaper the ECB was ready to move ahead with bank reforms, lower taxes and cut red tape to spur the euro zone recovery, which Draghi said was "fragile and uneven."

But after more than six years of central bank policy debate, European businesses, workers and investors are still waiting for the Continent's recovery to take hold. In the meantime, when an economy stops growing, so does demand for is currency.

So far, Europe's central bankers have cut interest rates to nearly zero to spur borrowing and help restart the hiring and spending, but those measures have come up short too. With rates at just 0.05 percent—deposit rates are actually negative in real terms—investors have little reason to put money in euro-denominated assets.

To spur demand for euros the central bankers are now turning once more to the idea of buying bonds issued in euros, a policy called quantitative easing that the U.S. Federal Reserve deployed shortly after the financial crisis unfolded in 2008. Now, with roughly $4.5 trillion in holdings sitting in its vaults—the Fed recently ended its buying spree.

In sharp contrast, Europe central bankers have deployed much more tepid response, in large part because of more limited powers, political squabbling and bureaucratic paralysis. Now, with interest rates at zero and Europe mired in deepening stagnation, speculation has risen that central bankers will finally decide at their upcoming Jan. 22 meeting that a U.S.-style bond-buying program is the Continent's last best hope to revive growth.

Read More US economic recovery finally taking hold

In the meantime, a weaker euro is already helping spur demand for European goods and services, especially among consumers using dollars to pay for them. Since May, the euro has slid nearly 15 percent against the dollar, effectively creating a generous markdown.

A year ago, for example, the cheapest fare for a round-trip, nonstop flight from New York to Frankfurt in July cost $1,460. Today, you can buy the same ticket for $1,193.

(To be sure, lower fuel prices account for at least part of the savings. Those lower costs should also help Europe jump-start growth.)

Read MoreCrude price slide hits oil exporter currencies

The weaker euro should also help spur European consumer demand for locally produced goods, which can be bought at a discount compared with imported goods from the U.S., which are priced in stronger dollars.

All of which should help the euro zone economy pull out of its stall and grow by 1.4 percent this year compared with just 0.8 percent growth in 2014, according to IHS Global Insight's chief European economist, Howard Archer.

"(But) there is a significant risk that the anticipated help to growth coming from low oil prices and the weak euro will be diluted by persistent business and consumer caution resulting from fragile confidence," he said in a note to clients.

Archer is among those who think the euro has further to slide, hitting $1.15 this year. Some analysts think the euro zone currency could soon trade at parity, a level not seen since at the end of 2002.

While the weaker euro may present American consumers with epic bargains, it creates major headaches for U.S. companies with strong export markets in Europe.

If you're a German computer buyer, you'll probably get a better deal on a German-made Fijitsu priced in euros than a Dell priced in dollars. For American companies operating in Europe, a lot depends on whether they pay their employees in higher-value dollars or relatively cheaper euros.

Those American companies also face a squeeze on profits when they convert their weaker euros back into dollars. (That's one more reason U.S. corporations have stashed large profit hoards overseas—apart from their reluctance to pay taxes on those profits when they transfer those dollars back home.)

Much depends on what happens to the value of the dollar, which has been rising against the currencies of the rest of the world for reason beyond Europe economic stagnation.

Slower growth in China, falling oil prices, money flowing out of Russia and other emerging markets into U.S. investments have all given the greenback a boost. On a trade-weighted bases, the dollar is up 13 percent since July.

That dollar could soon get another boost if the Fed later this year gives U.S. interest rates a widely expect nudge higher, boosting returns in dollar-denominated bonds. That could put added pressure on Europe central bankers to deploy their own bond-buying program to boost demand for euros.

It's far from clear those bond purchases will restart Europe's economy and halt the euro slide. But the move is widely seen as the last best move left in European central bankers' policy toolkit.