Purchasing Power Parity and Currency Valuation

In the context of international finance, purchasing power parity (PPP) is a key concept that links exchange rates to the relative price levels of two countries. According to the PPP theory, in the long run, exchange rates should adjust to equalize the price of a basket of goods between two currencies.

Imagine that the current exchange rate between the US dollar (USD) and the Euro (EUR) is 1.2 USD/EUR. If a similar basket of goods costs $120 in the United States and €90 in the Eurozone, what does this imply about the validity of purchasing power parity between the two currencies?