The single currency fell to just $1,0003 on Tuesday morning on concerns that the planned shutdown of the Nord Stream 1 pipeline – which carries natural gas from Russia to Europe – for maintenance could become permanent. Russia’s invasion of Ukraine in late February has sparked fears about Europe’s energy supplies and hurt the region’s economies, pushing the euro 12 percent lower against the U.S. dollar so far this year. The euro is also being hit by expectations of further aggressive rate hikes from the US Federal Reserve, which are driving the greenback higher. Analysts at Japanese bank Mizuho said the move towards the euro-dollar rate was happening as “the recession in the eurozone has been priced in”. Neil Wilson, chief market analyst at trading platform Markets.com, said: “The euro has edged closer to parity with the dollar for the first time since 2002. It has been in decline for months, but the euro has hit a new low as fears increase Russia could cut gas supplies to Europe this winter. French Economy and Finance Minister Bruno Le Maire warned over the weekend that there was a high chance Moscow would pull the plug. This is further fueling fears of a recession in the bloc and the currency simply cannot catch a bid.” Wilson said it was time for the European Central Bank to take decisive action. “The ECB is fooling around while the currency burns, causing worse inflation and more misery for the population,” he added. “It’s time for an extraordinary hike between meetings to show they are serious – the market just doesn’t believe in the ECB anymore. Inflation above 8% and interest rates remain negative… it’s crazy.” The pound also fell against the dollar, hitting $1.185 on Tuesday morning, its lowest level since March 2020, weighed down by political uncertainty and economic gloom. The race to replace Boris Johnson as prime minister is heating up, with many candidates promising tax cuts. Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk “The pressure on the euro and sterling reflects serious concern about the economic outlook. With inflation skyrocketing and no plan to bring it under control, currencies are low,” Wilson said. The Conservative Party’s 1922 Committee set the timetable for choosing a new Tory leader and prime minister on Monday night, with the aim of announcing a winner on September 5. Rishi Sunak, the former chancellor, launches his campaign for the Tory leadership later on Tuesday.
