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Euro Fails to Find Support as Russia Tightens the Gas Supply Again
22.08.2022

Euro

The price of the Euro continues to remain under pressure from developments throughout the day. The currency is declining against the US Dollar, British Pound, Japanese Yen, and Swiss Franc. EUR/USD, which had generally been strong throughout the year, is seeing the strongest declines.

The Euro struggled last month when the Nord Stream Pipeline was temporarily closed. Now, Russia confirmed that the pipeline will close again. The Eurozone is hopeful that the gas route will only be closed for 3-4 days as has been advised by their Russian counterpart. Nonetheless, the news saw European gas prices rising significantly and the Euro further declining.

The currency pair which has remained in the spotlight, EUR/USD, has declined to below parity levels for the second time this year. Currently, the exchange rate is at 0.9997 which is 40 PIPs lower than the weekly market open price. The lowest price the pair has witnessed this year is 0.9950. The current trend remains steady with the price only experiencing one minor retracement throughout the day. Traders will be keen to see the asset’s reaction to the US market opening.

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EUR/USD 15-Minute price chart on August 22nd.

Another factor that has been influencing the Euro, is the scheduled Purchase Manager Index for the Eurozone, which is due to be confirmed tomorrow. The index is deemed to be a significant price driver.

Bitcoin

The price of Bitcoin has declined by 1.22% against the US Dollar but is attempting to increase in value. The asset actually reached a low of -2.60% before retracing back up. However, traders' attention still remains on the significant decline which took place on Friday when the price of Bitcoin declined by 9.27% within a single day. This was the biggest decline the asset had experienced since the 18th of June this year.

Experts are not 100% certain as to why the asset saw a significant decline in price over a very short period of time. Several experts believe that this price movement may have been triggered by a one-time asset sale by a large investor. Experts are also cautious of the deterioration of weaker economies which tend to invest heavily in cryptocurrencies due to the destabilization of their regional currency. According to economists, countries in Africa, Asia, and South America are at extremely high risk.

Crude Oil

The price of crude oil is attempting to form a higher price wave which would form an official bullish trend, if traders are following Elliot Wave Theories. Yet, it has declined to $90.35 over the past 2 hours. The price of oil is partially supported by a lower supply within the market and a lower number of barrels held by US commercial firms. However, at the same time, the risk of global recession will become a significant strain on the prices, especially if employment is affected.

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*Crude Oil 1-Hour price chart on August 22nd. *

Over the past couple of hours, the former Treasury Secretary, Mr. Summers has advised that the Federal Reserve needs to deliver a bleak picture of the global economy at this week’s symposium. According to Mr. Summers, the Federal Reserve needs to continue hiking interest rates until either the economy sees a significantly lower inflation rate or the unemployment rate rises considerably. Many economists, like Mr. Summers, see longer-term high inflation as a bigger risk to the economy compared to higher interest rates.

The price of oil could be substantially pressured if economic statistics do start to deteriorate or interest rates continue to increase. This is something that the market will be following throughout the Jackson Hole Symposium which will take place on Thursday and Friday.

Key Takeaways

  • The Euro remains under pressure and declines against all competitors
  • EUR/USD has yet again declined below parity levels.
  • Russia announces that the Nord Stream Pipeline will once again close temporarily.
  • Eurozone’s Purchase Manager Index to be released tomorrow morning.
  • Experts are speculating that Bitcoin’s decline may have been triggered by a single investor.
  • Price of oil is attempting to gain some ground as the market supply declines.
  • Markets are anticipating the Jackson Hole Symposium to be held end of week.
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