At 1245 GMT, the euro sank 0.4% to $0.998, its lowest level since December 2002.
The single currency has lost more than 10% so far this year against a rising dollar. The drop below parity came after another strong data set from inflation in United States.
dollar and euro parity
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 which rose 9.1% year-on-year in June and approached a 41-year high.
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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