The euro fell today, Wednesday, affected by the bleak outlook for the European economy, and the prospect of a complete cut in Russian gas supplies, below the symbolic parity threshold with the US dollar, which has not been crossed since December 2002.
The euro was trading at $0.9998 at around 1245 GMT, in a precedent since the beginning of trading in the European currency, after official figures showed a rise in inflation in the United States in June, which reinforced expectations that the US Federal Reserve would follow a tighter monetary policy, quoting “France”. Press”.
This comes after the euro was hovering above Parity point with the US dollar In today’s trading, traders await the impact of US inflation data released today, which showed that it rose to the highest rate in four decades.
Since it became available for circulation in 1999, the single European currency has spent very little time below par with the dollar. The last time this happened was between 1999 and 2002, when it fell to a record low of $0.82 in October 2000.
During its relatively short history, the euro has become the second most sought-after currency in global foreign exchange reserves, and the daily rate of EUR/USD has been the highest among the currencies in the global market with a volume of 6.6 trillion dollars per day.
On Tuesday, the euro fell as low as $1.00005 on the most widely used EBS trading platform, and touched $1 in overnight trading on Archyde.com.
Market watchers will focus on US CPI data released today. Especially after the rise in inflation in June to 9.1% exceeded expectations of economists.
Analysts said that higher inflation is expected to boost expectations of a Federal Reserve interest rate hike and push the dollar higher, which could break the euro-dollar parity.
But traders will be looking for any signs of inflation peaking, as this is likely to convince the US central bank not to become more aggressive in raising interest rates in the future, according to “Archyde.com”.
The euro has fallen nearly 12% this year and slumped to a 20-year low on Tuesday as the war in Ukraine triggered an energy crisis that hurt growth prospects on the continent. Germany has also moved to the second stage of a three-tiered gas emergency plan, warning of a recession if Russian gas flows are halted.
Yasser Al-Rawashdeh, head of the Middle East trading department at Saxo Bank, said that there are fears that Russian supplies will not return to Europe again, which will negatively affect the performance of the euro.
In an interview with Al-Arabiya, Al-Rawashdeh said that when following up the flows of Russian gas to Europe in recent months and comparing them to euro-dollar prices, we find a very strong positive correlation.
He added that the other factor affecting the euro is the interest rate differentials between the US Federal Reserve and the European Central Bank.
He expected the interest rate differentials to continue to increase, especially as the Federal Reserve may raise them by an additional 75 basis points, while the European Central Bank will increase only 25 basis points.
Al-Rawashdeh continued: “Central banks’ movements depend on the economic data that determines the path.”