According to financial news on January 2 (Editor Niu Zhanlin), during the trading session on Thursday, the Euro to US Dollar exchange rate continued its recent decline, reaching its lowest level in more than two years. The imminent arrival of Trump has intensified concerns about the deteriorating economic prospects in the Eurozone, with the Euro to US Dollar approaching parity.

Specifically, the Euro to US Dollar has fallen nearly 0.5%, reaching 1.0320 USD, the lowest level since November 2022. The performance of the British Pound is also lagging behind other major currencies, dropping to its lowest level since May last year.

Investors are increasingly worried that Trump's proposed Trade tariff measures could have a devastating impact on the export-oriented Eurozone economy, and are also concerned about the escalating tensions between Russia and Ukraine, as the European Central Bank seems likely to further lower interest rates.

All of this is bad news for the Euro. Over the past three months, the Euro to US Dollar exchange rate has cumulatively fallen nearly 8%.

Jane Foley, head of Forex strategy at Rabobank, said: "The economic growth prospects for Germany and France are poor, along with political uncertainty, the European Central Bank may announce more consecutive interest rate cuts in the spring." She expects the Euro to US Dollar to fall to parity in the second quarter.

Other strategists also predict that the Euro will fall to parity with the US Dollar this year, or even lower. The last time it broke this key psychological barrier was in 2022, when the conflict between Russia and Ukraine fully erupted, leading to Europe's energy crisis and triggering fears of an economic recession.

Just this week, Russia ceased supplying Henry Hub Natural Gas to Europe through Ukraine, citing Ukraine's refusal to extend a pipeline agreement, marking the severing of one of the last few energy ties between Russia and its former largest market.

Gazprom stated on Wednesday: "Due to Ukraine's repeated clear refusal to extend these agreements, the company has been deprived of the technical and legal opportunity to supply transit Henry Hub Natural Gas." Ukraine welcomed Russia's cessation of these gas supplies, stating that it would strike a blow to its enemies. Ukrainian Energy Minister Herman Galushchenko stated: "This is a historic event. Russia is losing its market and will suffer economic losses."

This reminds traders of the energy dilemma in Europe and also means that central European countries will be forced to procure more expensive gas from other sources, which increases supply pressure as gas reserves in the region are depleting at the fastest rate in years.

However, European Central Bank President Lagarde stated in her New Year's address that the 2% inflation target is still achievable. The growth of the consumer price index in the Eurozone has slowed down last year, falling below the European Central Bank's target in September, although it has rebounded in recent months.

Meanwhile, the British Pound is also facing downward pressure due to concerns about the growth prospects of the United Kingdom's economy. Foley of Rabobank pointed out: "Economic weakness is a common problem for Germany, France, and the United Kingdom, and concerns over recession have increased after the United Kingdom released weak GDP data at the end of 2024."

The GDP of the United Kingdom remained flat in the third quarter of 2024, with the Bank of England forecasting no growth in the fourth quarter of last year. This lukewarm economic performance stands in stark contrast to the first half of last year, when the United Kingdom experienced nearly the fastest growth rate among the G7 countries.