The euro has gained over 35% on the dollar since Jan02.How can they say inflation is under control?

Question

January02 over 1.10 euros to the dollar. Now .76 cents

Answer 1

Inflation is under control in Euros (they measure their prices in Euros, not dollars, so for them inflation is under control).
What is going to hell is Europe's trade balance with the US as now, in relative terms, what they export to the US is more expensive and what they import from the US is cheaper.

Answer 2

It has not been under control for at least 2 years now. That's what we call politics and economics. The issue is that the dollar is not as strong anymore because of geopolitics and events that keep kicking it in the butt. Unemployment has been driving the economy down for the past 4 years. Weather conditions have been hampering on businesses and commerce. Buying power is not stable.
The inflation will not be under control for another 2 years. The Euro the Yen and the British pound will remain stronger because of stable politics.

Answer 3

Inflation is unrelated to the exchange rate. Inflation indicates a rise in the domestic price level, and is measured in domestic currency. Thus, if a hot dog cost $1 last year and now cost $1.03, then there is a 3% inflation rate.

The euro gaining on the dollar is related to the trade balance. As the US purchases more from abroad, more of our dollars are sent out and held in reserve by other countries. These dollars are to be used to purchase our exports. The problem is that the US is not exporting as much as it imports. Thus, other countries have more and more of our dollars. They no longer have as strong of a demand for these dollars, and thus the value of the dollar to them is falling. In order to keep the dollar in check compared to other currencies, we need to correct the trade imbalance and begin exporting more or importing less. But this is unrelated to inflation itself.