The euro is lower than the dollar at its lowest level in twenty years

The euro fell to its lowest level in 20 years, in light of the exacerbation of Europe's concerns about energy supplies and economic growth, while the dollar rose against major currencies, supported by inflows of the currency, which is considered a safe haven.

Today, Tuesday (August 23, 2022), the price of the euro fell to its lowest level in two decades against the US dollar, as the contraction of activity in the euro area in August confirmed the money changers' fears of the repercussions of the energy crisis. At about 09:15 GMT, the euro fell 0.04% to $0.9939, after it reached $0.9901, an unprecedented level since December 2002, the year it began trading.

The index of private sector activity in the Eurozone fell to 49.2 points in August, its lowest level in 18 months, indicating a contraction in activity. "These figures confirm our scenario of the necessary tightening of ECB policy at a time when the economy enters a recession," warned Jack Allen Reynolds, an analyst at the Capital Economics think tank .

Sterling's performance against the dollar was better, as it recorded $1,1775 at 09:15 GMT, as the UK PMI remained above 50 points in August.

The two currencies fell for several sessions after announcing the suspension of Russian gas deliveries via the Nord Stream 1 gas pipeline between August 31 and September 2. "Faced with the threat of shortages threatening Europe this winter, we are seeing price sensitivity to any bad news," said Guillaume Duggan, analyst at Western Union. He notes that the euro is also facing difficulty against the Australian and Canadian dollars, in addition to being at its lowest levels against the Swiss franc since 2015.

The questions now revolve around the level the euro can fall to. "The strength of the dollar depends in part on the idea that the US Federal Reserve will issue a message on tight monetary policy at the Jackson Hole Forum" where central bank governors meet at the end of the week, notes Lee Hardman, an analyst at the Mitsubishi Financial Group of Japan.

Reuters, AFP