Euro Briefly Slips Back to Dollar Parity on Gas Supply Fears

The euro briefly dipped below parity against the dollar on Monday and was trading at five-week lows, dragged down by fears that a three-day maintenance in European gas supply later this month may deepen an energy crisis.

The currency dropped to a low of $0.99945, down 0.4% on the day. This is the lowest it has been since mid-July.

The eurozone is under pressure due to Russia’s planned unscheduled pipeline maintenance, which caused gas prices to reach another record high on Monday.

The main pipeline feeding natural gas to European countries from Russia is expected to commence an unscheduled maintenance at the end of the month.

During the weekend, Russian state-owned energy company Gazprom stated that it will shut down Nord Stream 1 pipeline, a key pipeline conveying natural gas to Europe, in an unscheduled maintenance for three days on August 31 – 2 September.

The shutdown will deepen an energy standoff between the Kremlin and European countries that could send the current 40-year high inflation even higher.

The flow through Nord Stream 1 pipeline is currently at 20% of its max capacity, and Gazprom stated that the output will remain as it is after the maintenance.