European stock markets were in the red with the dollar index down 0.2% on the day at 107.93. The euro added 0.2% to $1.00595.
On Tuesday, the euro fell to a low of $1.00005 on the Electronic Broking Services (EBS) trading platform and touched $1 in early morning Reuters trading.
Market watchers were focused on US CPI data due later in the day. Economists forecast that US headline inflation accelerated to 8.8% year-on-year in June, a four-decade high.
But the core CPI, which strips out volatile food and energy prices, is expected to retrace the 0.6% monthly rise and cool slightly to 5.7% year-on-year.
Higher-than-forecast inflation would bolster expectations of Federal Reserve rate hikes and push the dollar higher, which could cause the euro-dollar exchange rate to break parity, analysts said.
But traders will be watching for any signs that inflation has peaked, as this could convince the US central bank not to become more aggressive in its future rate hikes.
The euro is down nearly 12% this year and fell to a 20-year low on Tuesday as the war in Ukraine triggered an energy crisis that hurt euro zone growth prospects.
Germany has moved into the second stage of a three-tier emergency gas supply plan and has warned of a recession if the flow of Russian gas is stopped.
Source: Ambito
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