The currency has weakened to a 20-year low against the greenback
The euro on Friday continued its slide to new 20-year lows against the dollar amid concerns of the bloc’s looming recession, with investors betting on potential parity with the US currency.
It was trading as low as $1.0081 to the dollar on Friday as of 07:44 GMT. The currency’s downward spiral has been swift, given that it was trading around $1.15 in February.
There’s approximately a 50% implied probability of the euro hitting parity against the greenback in the next month and a one-in-four chance that it will hit 0.95 by the end of the year, according to a Bloomberg options-pricing model.
The currency has been in consistent decline as fears of a Eurozone recession intensify amid rising uncertainty about Russian energy supplies. In June, shipments to Europe by Russia’s Gazprom via the Nord Stream 1 pipeline dropped to about 40% of capacity because of parts shortages caused by sanctions on Moscow. The pipeline will shut down completely for 10 days in mid-July for regular maintenance.
Meanwhile, some experts note that the euro “remains effectively unbuyable this summer.”
The chief global currency strategist at Societe Generale SA, Kit Juckes, told Bloomberg: “Europe’s energy dependency on Russia is falling, but not fast enough to avoid recession if the pipeline is closed. If that happens, EUR/USD will likely lose another 10% or so.”
For more stories on economy & finance visit RT’s business section