The euro fell to a 20-year low against the dollar

Influenced by factors such as the rising risk of economic recession in the euro zone and the strengthening of the US dollar exchange rate, the euro fell to its lowest level against the US dollar in 20 years on the 6th.
The market is worried that the rising energy prices may plunge the European economy into recession. After the sharp fall of the previous trading day, the exchange rate of the euro against the US dollar continued to fall below 1.0200 US dollars on the 6th. As of the end of the New York foreign exchange market on the 6th, the euro was 1.0183 US dollars, lower than the previous trading day's US $1.0265, hitting another low in nearly 20 years.
Retail sales data in the euro zone in May were far below market expectations. Data released by Eurostat on the 6th showed that retail sales in the euro zone increased by 0.2% month on month and year-on-year in May. Although the month on month growth rate returned to positive growth, it was still less than the expected 0.4%. The year-on-year growth rate is much lower than the 4% level last month and the 5.4% expected by the market.
Rising inflation is significantly reducing the purchasing power of consumers, and high inflation has frustrated the hope of a complete improvement of the retail industry against the background of the recession. According to a recent survey of 800 companies by the German Trade Association, 45% of retailers expect their business to decline year-on-year in the second half of the year, and only 20% of companies expect their sales to increase in the second half of the year.
According to the European Central Bank, the euro has fallen more than 9% against the US dollar this year. Bloomberg option pricing model data showed on the 5th that the possibility of parity exchange between the euro and the US dollar by the end of the year rose from 46% a day ago to 60%.
Market participants believe that the weakening of the euro exchange rate is mainly due to the recent multiple signs that the growth momentum of the European economy may slow down, which has led to the continuous cooling of market expectations for the European Central Bank to raise interest rates. The European Central Bank hopes to curb inflation by raising interest rates, and is worried that raising interest rates will lead to increased debt pressure in some southern European countries, and the risk of debt default and economic recession will rise, so it is slow to act. At the same time, the market is expected that the Federal Reserve will continue to raise interest rates by a large margin at the end of July, leading to the continued strengthening of the US dollar exchange rate. The tightening pace of the European Central Bank is far behind that of the Federal Reserve, putting pressure on the euro exchange rate.
Derek Halpenny, chief analyst of Mitsubishi UFJ Financial Group, said that as the energy crisis intensifies and the risk of economic growth increases significantly, it is difficult for the euro to appreciate significantly in the future.
The analysis of the Netherlands International Bank Group said that the strong dollar environment means that the euro and the US dollar may realize parity exchange this month.
Tampas, the US foreign exchange trading platform, said that the energy crisis was a serious challenge, pushing the euro to a new low since 2002. The sharp rise in natural gas prices and the lack of clear prospects for supply chain mitigation put pressure on the euro, which ran counter to previous appreciation expectations.
Moritz Payson, a foreign exchange trader at Berenberg bank in Germany, said that Russia may no longer deliver natural gas to Europe. This threat puts pressure on the euro. Energy prices in Europe are several times higher than those in the United States.
Kit Jukes, an analyst at Societe Generale, said that Europe's energy dependence on Russia was decreasing, but it was not enough to avoid a recession when Russia stopped providing natural gas to it. If this happens, the euro will fall by about 10% against the US dollar.