For the first time in two decades, the exchange rate between the euro and the US dollar on Tuesday has reached parity – meaning one US dollar is equal in value to one euro.
This means European companies and consumers will pay more for the goods and services they import, while European exports become cheaper in international markets.
The markets assume the European economy is heading for a recession due to high inflation and energy supply uncertainty, the Euronews news channel reports.
The single currency of 19 European Union countries has not fallen to or below a one-to-one exchange rate with the US dollar since November 2002.
Since then, the euro enjoyed a steady rise, reaching almost $1.60 in the summer of 2008, when the Great Recession was wreaking financial mess across the US.
The European Central Bank (ECB) has already hiked interest rates with the aim of taming inflation and plans to continue doing so as the situation further deteriorates.
Euro has declined 10% against US dollar since the start of the year, according to ECB data.