Market Insider

Euro could finally reach parity with the dollar

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Euro to bounce back?

The euro may finally reach parity, or trade one-for-one with the dollar, now that the Federal Reserve may have given a shot in the arm to the U.S. currency.

The move has been expected for a while, but the euro surprisingly strengthened after Italy voted against constitutional reform in early December. Euro weakness against the dollar resumed after last week's European Central Bank meeting, and accelerated after Wednesday's Fed decision on rates.

The euro was near $1.042 in late trading Thursday, after hitting its lowest level against the dollar since 2003, at $1.0364 earlier in the day.

"A lot of people figure the door has been opened here for parity on the euro," said Carl Forcheski, director of corporate FX sales at Societe Generale.

"We've broken through so many supports lately that the next level of support is parity, 1.00," he said. That's about 4 percent weaker than where the euro was trading Thursday afternoon.