Jul 12, 2022 02:57AM ET
The US dollar climbed to a fresh 20-year high in early European trade on Tuesday, while the euro fell near parity on global growth worries, Europe's energy concerns and expectations of more aggressive interest rate hikes by the Federal Reserve.
At 2:55 AM ET (0655 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.4 percent higher at 108.225, having earlier climbed to 108.47, the highest since October 2002.
The dollar has soared this year as the US Federal Reserve has proved one of the most aggressive central banks in tightening monetary policy to curb runaway inflation.
The Fed raised rates by 75 basis points in June, its biggest rate hike since 1994, and Wednesday's expected release of the Consumer Price Index (CPI), which rose to 8.8% in June on an annualised basis, points to another sharp hike.
EUR/USD fell 0.2% to 1.0021 after dropping to 1.0006 earlier on Tuesday, the weakest level since December 2002.
The single currency is suffering from concerns about a possible energy supply crisis in the region as the largest single pipeline carrying Russian gas to Germany, the Nord Stream 1 pipeline, began its annual maintenance on Monday and is expected to be disrupted for 10 days.
French Finance Minister Bruno Le Maire said on Monday Europe should brace for a complete disruption of Russian gas supplies, and many fear Russia could use this opportunity to halt or significantly reduce its exports.
Attention will turn later in the session to the release of Germany's ZEW Economic Sentiment Index for July, which is expected to weaken significantly as growth slows in Europe's leading economy.
USD/JPY fell to 137.38 after hitting a fresh 24-year high of 137.75 on Monday, following Bank of Japan Governor Haruhiko Kuroda's pledge to maintain his soft monetary policy stance to try to boost the country's struggling economy even as its currency slumps.
GBP/USD fell 0.2 percent to 1.1865, having earlier sunk to a fresh two-year low at 1.1847, as the ruling Conservative party tries to decide its next leader and thus prime minister.
The risk-sensitive AUD/USD fell marginally to 0.6729, just above the two-year low hit on Monday, while USD/CNY rose 0.2% to 6.7304, with the yuan weighed down by fresh COVID outbreaks in China.