Forex Market Overview: How Are USD And EUR Holding Up?

The forex market worries investors. The euro fell to a fresh 20-year low on Wednesday as fears of rising energy prices and possible shortages cast a shadow over the eurozone economy, while demand for safe-haven assets pushed the dollar to a fresh 20-year high.

Equinor (EQNR.OL) said that all oil and gas fields affected by a strike in Norway’s oil industry should be fully operational within days.

Meanwhile, Goldman Sachs raised its forecast for gas prices, saying a full recovery of Russian gas flowing through Nord Stream 1 was no longer the most likely scenario.

Despite Tuesday’s price drop, analysts expect a quick rebound in oil prices as supply constraints persist and spread steadily over the previous month.

The euro was down 0.7% at 1.0186, falling below 1.02 for the first time since December 2002.

Eurozone consumers cut spending on food, beverages, and tobacco for a second straight month in May. Meantime, prices rose, according to estimates released on Wednesday by Eurostat.

The divergence between central bank tightening cycles on both sides of the Atlantic remains a focus for investors.

They expect forex markets to consolidate at current levels on Wednesday before releasing the minutes of the FOMC’s June meeting due at 1800 GMT.

The Dollar Index Has Slightly Recovered

The U.S. dollar index, which tracks the greenback against six currencies, was up 0.4 percent at 107.02, its highest level since 2002.

The euro fell to its lowest level against the Swiss franc since The Swiss National Bank lifted its currency cap in 2015.

The euro fell 0.4% to a fresh seven-year low of 0.9897.

Some safe-haven buying supported the yen after Japanese households’ inflation expectations strengthened in the three months to June. The share of families expected higher prices in the coming year to a 14-year high.

The dollar fell 0.3 percent to 135.36 yen. At the end of June, it reached 137, the highest level since 1998.

The Bank of Japan said it would not withdraw monetary stimulus as inflation stemmed from higher fuel and commodity costs due to the Ukraine crisis and was likely to be temporary.