Dollar resilient, euro wallows at two-decade low on economy woes

Dollar Background

The dollar held firm on Tuesday on safe haven flows, while the euro languished around a two-decade low as Europe confronts energy supply and broader economic growth concerns.

The euro EUR=EBS touched its lowest since late 2002 of $0.9926 overnight and was last barely higher at $0.9941, Reuters reports.

Russia will halt natural gas supplies to Europe via the Nord Stream 1 pipeline for three days at the end of the month, the latest reminder of the precarious state of the continent’s energy supply.

Heatwaves in the continent have already put a strain on energy supplies and worries are growing that any disruption during the winter months could be devastating for business activity.

“Given the current mood, there’s obviously concerns as to whether that’s going to be three days or whether it’s going to be three years,” said Ray Attrill, head of FX strategy at National Australia Bank (NAB).

“Is it really just going to be a three-day maintenance or is this just another example of weaponisation of gas supply into Europe?”

The pound GBP=D3 was also dragged to a new 2.5-year low overnight, and hobbled near that level at $1.17715 in Asia trade. The Japanese yen JPY=EBS steadied at 137.265 per dollar after touching a one-month low of 137.705.

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