The euro made a break lower a while ago, which sent it to the worst levels since 2003 as it quickly cut through both the 2022 low of 1.0350 and the 2017 low of 1.0340. The low so far is 1.0281. After the crash lower, we are not seeing any attempts to jump higher, so buyers are nowhere to be seen, which suggests that parity at 1:1 is in sight.

The move in EUR/USD is lending a broad bid to the USD which is making decent gains against most major currencies. There’s no obvious catalyst for the move in the Euro today but a few things are being cited:

The surge in prices is a burden on the European consumer and the slowdown in services reflects that. German bunds are bid, with yields down 7.2 bps compared to flat trading in US Treasuries, though that could change when US traders return from holiday in a few hours.

EUR/USD H4 Chart

The 20 SMA (gray) has turned into resistance

EUR/CHF has broken parity and the SNB (Swiss National Bank) looks to be out of the game. European benchmark natural gas prices are up another 6.3% and at the highest since the brief March spike, despite LNG (Liquid Natural Gas) being on a declining trend since early June. There are growing fears that Russia will cut off the continent, ensuring a brutal winter and the collapse of some industries.

The main fear is that the eurozone is heading for a tough recession and the catalyst is likely to be natural gas prices, which feed into power costs. Russia has tapered gas supplies for maintenance issues but there’s an intensifying fear that ‘maintenance’ will become permanent.

EUR/USD Live Chart