The euro lingered near a 20-year low near parity with the dollar on Tuesday, on fears that an energy crisis could send Europe into recession, while the US currency was boosted by expectations that the Federal Reserve will continue to aggressively tighten policy to combat inflation.
The euro tumbled as low as US$1.0051 against the dollar, the weakest since December 2002.
After rising to its highest level since October 2002 overnight, the dollar index was little changed at 108.17 early Tuesday.
The dollar index is a measure of the value of the US currency against six other foreign currencies, with the euro having the most weighting.
The Nord Stream 1 pipeline, the largest single pipeline carrying Russian gas to Germany, began annual maintenance on Monday, with supplies anticipated to halt for 10 days, according to Reuters. Governments, markets, and businesses are concerned that the shutdown could be prolonged due to the conflict in Ukraine.
The decline in the value of the euro has been a major factor in the dollar index’s rise, and concerns about global growth have also been supportive of the safe-haven US currency, especially since China has imposed strict zero-COVID policies to curb outbreaks.