The dollar rose to a 20-year high on Wednesday and the euro to a 20-year low as rising energy prices cast a shadow on the euro area economy but strengthened the dollar’s safe-haven appeal. Traders are increasingly confident that a breakout of the euro against the dollar is imminent.
DollarindexIt rose above 107 and the reported euro exchange rate fell below $1.02 at 107.04, both of which were the first time since December 2002. The US dollar index is up 12 percent so far this year, on track for its best year since 2014.
The euro fell 0.82% to $1.0182 against the 6th dollar. The dollar index hit an intraday high of 107.27, while the euro briefly fell 1% to a low of $1.0162.
The dollar rose 0.07% to 135.95 yen against the yen on the 6th.
Energy prices remain high and the Fed is raising rates faster than others, said Shahab Jalinos, global head of overall business strategy at Credit Suisse.Central bankBullishly, the dollar strengthens, “it is traditional macro factors that are strengthening the dollar at the moment, not risk-averse operations.”
Shahab Jalinos said the US is now a net exporter of energy and Germany is running a trade deficit for the first time since 1991.Rate of interestand the U.S. For a favorable trade turnaround, the dollar’s strength adds to the stability.”
Shorting the euro is now one of the hottest trades in the market, with strategists from Nomura International to HSBC asking clients to expect further losses in the euro. According to Bloomberg Intelligence’s options pricing model, the euro has a 40 percent chance of parity with the dollar by the end of the year.
With the euro hitting a 20-year low, investors are considering the possibility that Russia could cut gas supplies to Europe and plunge the region into recession. The economic shock will make it difficult for the ECB to tighten monetary policy, and the U.S. With the spread can be widespread.
“It’s not just the threat of a gas outage weighing on the euro,” said Moritz Paysen, a foreign exchange and interest rate advisor at Bernberg. “The already high energy costs are a burden. Energy costs in Europe are many times higher than in the United States.”
Tim Brooks, head of foreign exchange options trading at market maker Optivar, expects more volatility if the euro turns against the dollar. The demand for euro options is concentrated in the lower range of around $0.92 to $1, he said.
Nomura International strategist Jordan Rochester said on the 5th that he is more confident that the euro will fall to $0.98 in August.
Bitcoin was up 1.9% in New York trade and was last at $20,541.80.