On Monday, the euro fell below the value of the US dollar, falling below parity as concerns about a worsening gas shortage in Europe grew. The drop occurred just days before the Federal Reserve was expected to emphasise its goal of containing high inflation at its symposium in Jackson Hole, Wyoming.

The euro fell 0.7% to $0.9968, the second time in a month that the common currency has traded below $1 against the US dollar this year. The latest move comes after Russia’s state-owned energy company Gazprom announced on Friday that the Nord Stream 1 pipeline into Europe would be closed for maintenance between August 31 and September 2.

Benchmark European natural gas prices soared on Monday, and Gazprom’s move fueled speculation about the pipeline’s prolonged closure.

“The energy shock appears certain to drive Europe into a recession,”

Only a recovery in the $1.0050-60 range will help stabilise the tone,” Chandler said, noting that the eurozone’s preliminary reading on August industrial and services activity is due Tuesday. The composite PMI is expected to show a further deterioration.

This year, the euro has fallen 12% against the US dollar, owing in part to Russia’s squeezing of gas flows into Europe since the Kremlin’s invasion of Ukraine in late February. As the winter season approaches, European officials have been working on stockpiling gas and managing soaring energy prices.

The euro has also fallen as US Treasury yields have risen as the Federal Reserve has raised interest rates. Fed officials will meet this week in Jackson Hole, Wyoming, for a conference that will culminate in a speech by Fed Chairman Jerome Powell on Friday.

Powell is widely expected to focus on persuading markets that the Fed is still on a hawkish monetary policy path and has not yet signalled rate cuts.

Societe Generale said in a note Monday that Powell is “likely to sound resolute, and committed to beating inflation.” “So far, the impact has been to spark a very sharp rise in global bond yields, which, combined with last week’s soft Chinese data, has sent global equities into a bit of a funk and given the dollar a big boost.” “All this talk about the dollar having peaked appears to be a bit jaded.”

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