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The euro was only used in electronic transactions between its adoption in 1999 and its formal entrance on the market in January 2002. During that time, the USD maintained a stronger value, coasting on strong economic output in the United States and uncertainty ahead of the release of hard currency in the eurozone. The EUR to USD exchange rate was near parity in January 2000, at US$1.013 to the euro. The euro traded in a relatively tight band, but fell to a low point of US$0.85 in October 2000, and again in June 2001.

The relationship quickly shifted, however, once the currency began circulating. The exchange rate dropped to EUR to USD 0.87 in February 2002, but the euro then rose against the dollar in all but four of the next 24 months. By November 2002, the euro’s value had surpassed the dollar, and reached an initial peak of US$1.264 by February 2004, after two years in circulation.

In the next two years through year-end 2006, the exchange rate varied between US$1.2 and US$1.3 to the euro. However, the dollar began to lose value against the euro more quickly as of January 2007, and its fall accelerated with the full onset of the global economic downturn. The euro rose to a peak of US$1.576 at the height of the economic crisis in July 2008, confidence in the US economy waned and the government contemplated a massive bank bailout.

The euro remained strong for a time, as many market analysts thought the sub-prime mortgage crisis would largely be confined to the US market. However, as the economic downturn became a global issue, the euro’s value plummeted to US$1.27 by November 2008, losing roughly 19% of its value in five months.

The exchange rate has varied considerably since year-end 2008, but always within a band of US$1.2 to US$1.5 to the euro. The euro largely weakened against the dollar in the first half of 2010, amid concerns that the eurozone was entering a prolonged recession. The euro then rose to a high of nearly US$1.47 in July 2011, as investors grew wary of the USD dollar during the US debt default crisis. However, the onset of the Greek sovereign debt crisis in later 2011 soon eroded these gains, the exchange rate settled at a low of EUR to USD 1.227 in July 2012. The euro recovered some of its value over the course of 2013, reaching US$1.37 in December, but continued concern over sovereign debt crises in the zone’s weakest economies limited these initial gains.

The US economic recovery gained speed in 2014, spurred by the shale production boom and an uptick in consumer activity. Economic stagnation continued in Europe, however, with eurozone inflation steadily falling and annual economic growth at near-stagnant levels. As a result, the euro fell against the USD in the last 10 consecutive months, from a rate of EUR to USD $1.382 in March 2014 to US$1.1615 in January 2015, the lowest rate seen since September 2003, more than a decade earlier.

This effect was not unique to Europe; the USD rose against all major world currencies in 2014 for the first time since 2000. While the euro fell considerably, losing 14.7% of its value against the dollar in the year through January 2015, other world currencies fell further; Norway, a major energy exporter, saw its krone (NOK) fall 19% against the USD, doubly impacted by the sharp downturn in global oil prices and its economic exposure to the EU.

The dollar’s rise against the euro is predicted to continue through 2015, as the European economy struggles to boost growth and works to minimise concerns over Greece’s debt restructuring. In early 2015, 15 of the 19 eurozone members had tipped into deflation, which may not bode well for the year ahead.