Inflation is accelerating in the United States and opens the door to an even stricter monetary policy across the Atlantic, causing the euro to fall to 0.9998 dollars around 2:45 p.m. before rebounding.
The euro, weighed down by the gloomy outlook for the European economy, with the possibility of a stoppage of Russian gas supplies, briefly plunged on Wednesday below the symbolic threshold of one dollar, which had not been crossed since December. 2002.
Inflation is accelerating in the United States and opens the door to an even stricter monetary policy across the Atlantic, causing the euro to fall to 0.9998 dollars around 12:45 GMT before a rebound.
Concerns regarding a complete cessation of Russian gas exports to Europe are growing: the French government mentioned this weekend a “probable” cut in supplies.
“How far can the descent of the euro go? It probably depends on Russia’s willingness to escalate the economic war with Europe,” comments Jane Foley, an analyst at Rabobank, who remarks that “guessing President Putin’s intentions is not easy”.
With meager growth in the euro zone, the European Central Bank (ECB) can hardly raise rates to combat inflation, which hit 5.8% in France and 7.6% in Germany in June, data shows. Wednesday morning.
This low remuneration for euro holders weighs on the European currency, the value of which has lost nearly 12% of its value since the beginning of the year.
The Galvanized Dollar
The dollar, meanwhile, is galvanized by its status as a safe haven in a context of slowing activity, but also by the repeated rate hikes of the Federal Reserve (Fed).
The American central bank is unable, for the moment, to bring down inflation: the rise in consumer prices accelerated further in June in the United States, and is now at its highest since November 1981.
Inflation thus reached 9.1% in June over one year, once morest 8.6% the previous month, according to the consumer price index (CPI) published on Wednesday by the Labor Department.
To curb runaway prices, the Fed “would continue, and might even accelerate, its program of rate hikes, which would support the greenback,” judge Ricardo Evangelista, analyst at ActivTrades.
The euro is holding up better once morest other currencies, such as the British pound or the yen, even though it has fallen to its lowest level since 2015 once morest the Swiss franc.
But the dollar is particularly important because it is the reference currency of many markets, including the oil market.
After its brief dip to less than a dollar on Wednesday, the euro rallied and traded at $1.0030 around 1:10 p.m. GMT (3:10 p.m. CET).
The day before, the single currency had already touched parity before rising, which analysts attribute to technical considerations, with some investors having to hedge their positions in particular.
But for Stephen Innes, analyst at SPI Management, “the rebounds of the euro will probably be followed by sales as long as (the gas pipeline) Nordstream 1 does not resume” its deliveries of Russian gas to Europe.
