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.