Brussels: The euro rose to its strongest position since 2021 against the US dollar on Tuesday, following the announcement that annual inflation in the eurozone has reached the European Central Bank's (ECB) target of 2%.

According to Anadolu Agency, the euro increased by 0.1% against the dollar, reaching 1.1821 as of 0930GMT, marking its highest level since August 2021. This rise is attributed to the confirmation of the euro area's annual inflation reaching the ECB's medium-range target of 2%, aligning with market expectations.

The primary contributors to the inflation increase were services, which rose by 3.3% in June, followed closely by food, alcohol, and tobacco at 3.1%. Non-energy industrial goods also saw a slight increase of 0.5%. Conversely, energy prices acted as a counterbalance, contributing to the inflation decrease by dropping 2.7% annually.

Historically, when the euro was introduced in 1999, the euro/US dollar exchange rate stood at 1.17. However, the currency initially lost value against the dollar, plummeting to 0.82 in October 2000. It subsequently gained strength between 2002 and 2008, reaching a record high of 1.6 in 2008. Although the euro maintained a strong rate for several years, it declined to a low of 0.96 in September 2022, its lowest in two decades and below the 1.0000 parity level.