EUR/USD collapses to twenty-year-lows

The EUR/USD pair collapsed to fresh twenty-year-lows, below the 1.0350 previous low printed on May 13, accelerating towards the 1.0250s region courtesy of a stronger US dollar. The pair loses almost 1.60% during the day.

The US Dollar Index advances to twenty-year-highs, above the 106.500 mark, up almost 1.30%, on renewed concerns of a recession, amidst an inflationary scenario.

On Monday, the Bundesbank President and ECB member Joachim Nagel warned the ECB against lowering borrowing costs for EU members in the southern area. He emphasized that the central bank should focus on fighting inflation, which according to him, may require more rate hikes than projected.

The Euro’s weakness is mainly attributed to a further surge in European gas prices, which triggered fresh concerns of a recession across the Eurozone. The reduction in pipeline supplies from Russia has accelerated the adjustment in stockpiles, generating upward pressure on European LNG prices.

Data-wise, the EU economic docket featured S&P Global Services and Composite PMIs for June, in Spain, Italy, France, and Germany. Most readings missed expectations and are showing the economy slowing at a faster pace. In the case of the Euro area as a whole, the Services PMI reading came at 53, while the Composite stayed around 52.