Dollar dominant as recession fears hit euro, pound bruised

The dollar stood tall on Wednesday, holding at a 20-year peak against the euro and multi-month highs against other major peers as higher gas prices and political uncertainty renewed recession fears and sent investors scrambling to the safe-haven currency, Reuters reported.

In Asia, the euro was at $1.025, only a fraction above its overnight low of $1.0236, its weakest since late 2002, The single currency lost 1.5% on Tuesday, its biggest fall since COVID-19 ravaged markets in March 2020.

Combined with falls in other major currencies, that left the dollar index just off its overnight 20-year peak at 106.57, though fellow safe haven, the Japanese yen, rose.

Charu Chanana, market strategist at Saxo Capital Markets, attributed the euro drop to dollar strength and “renewed fears of gas shortages in the Eurozone as Russia threatens to cut supplies further”.

German and French year-ahead power prices are around record highs as regulators try to ensure enough gas is bought for storage and supervise the drawing up of priority lists for access to gas.