Euro strikes dollar parity as eurozone recession fears mount

“The next few weeks could be challenging for Europe, with possibly maximum uncertainty stretching into August,” said SPI Asset Management’s Stephen Innes.

“Investors increasingly believe that gas may not start to flow through Nord Stream 1 again following the scheduled maintenance on Jul 11-21, with further ‘temporary’ interruptions seen as likely.”

Worries about a COVID-19 flare-up in China – fuelling fears of more lockdowns – added to the downbeat mood, just as investors prepared for a week of economic data and corporate earnings that could have huge implications for markets.

A forecast-beating US jobs report last week suggested the world’s top economy was coping with higher Federal Reserve rates, but it also gave the central bank more room to continue tightening – leading to concerns it could go too far and cause a contraction.

The European single currency is also under pressure from the Federal Reserve hiking US interest rates more aggressively than the European Central Bank.

The dollar has jumped 14 per cent against the euro since the start of the year.

Central banks are increasing borrowing costs in a bid to tame inflation, which has been fuelled by soaring energy prices.

Oil and gas prices have rocketed this year after economies reopened from COVID-19 lockdowns and following the invasion of Ukraine by major energy producer Russia.