The euro is equal to the dollar. Here’s why it matters.

The euro and U.S. dollar have reached parity for the first time in two decades. (Daniel Munoz/AFP/Getty Images)

The euro and the U.S. dollar are exchanging at a 1-to-1 rate for the first time in nearly two decades, when the European currency was in its infancy.

The euro has been losing ground against the dollar since the start of the year, when it hovered near $1.13, amid an aggressive inflation-fighting campaign by the U.S. Federal Reserve, along with broader global disruptions set off by the Russian invasion of Ukraine. They reached parity on Wednesday morning, according to Bloomberg data.

The stronger dollar is good news for Americans considering a European vacation or buying goods abroad. It could lower the price of commodities, such as grain, and potentially ease the relentless inflation that has sent household and business expenses surging. But experts say the euro’s retreat also hints at the slower pace of global trade, adding to recession worries.

Here are some of the ways this could affect consumers, businesses and travelers.