The euro slipped below parity against the US dollar for the
first time in 20 years on Wednesday, as investors shift to the safer options of
the greenback after US consumer prices touched new four-decade high in June.

As of 08:57 Eastern time zone (12:57 GMT), the euro was 0.18%
down at $1.0020. The single currency has recovered marginally from a low of
0.9999 touched following the release of the latest consumer price index (CPI) from
the US Bureau of Labor Statistics.

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The euro had touched $1 on Tuesday, down around 12% since
the start of this year amid fears of recession on the continent abound,
worsened by high inflation and energy supply disruptions caused by the Russia’s
war in Ukraine.

The key gauge of annual inflation rose to 9.1%, exceeding
analyst forecasts. The increase was largely affected by base effects stemming
from developments 12 months ago, but still suggest a widespread rise in price
pressures.

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On a month-to-month basis, prices increased by 1.3% from 8.8%
in May, the biggest monthly rise since 2005, due to sharp price rises in the gas,
shelter and food costs.

The inflation figure puts further pressure on the Federal Reserve
to aggressively hike interest rates in a bid to curb red-hot inflation. Though,
investors remained concerned that these big rate hikes may instead lead to a
broader economic slowdown.

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The benchmark 10-year US Treasury yield, which is often
used as a measure for economic risk, rose by nearly 8 points to 3.034%. The US
two-year yield, an indicator for expectations for Fed rate policy, also jumped
by 12 basis points to 3.17%, its highest level in three weeks. Bond prices tend
to move inversely to yields.

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Meanwhile, the dollar index, which tracks the greenback
against a basket of other advanced economy currencies, was higher by 0.08% to
107.99, moving up towards a 20-year high touched on Tuesday.