Flight to the dollar pushes down EUR/USD, GBP/USD and AUD/USD
Concerns about recessions and expectations around Fed tightening have driven renewed dollar buying.
EUR/USD dives towards parity
A fresh bout of strength for the dollar has been felt across currency markets generally, but for EUR/USD the picture has been given added strength by concerns that Russian gas supplies will remain cut off into the late summer and early Autumn. Investors fear that this will tip the continent into a recession as consumers struggle to cope with higher energy prices.
As a result, EUR/USD seems set to hit parity in the next day or so, taking it to fresh 20-year lows. Additional declines below parity’s psychologically important level would target $0.9623, the lows from summer 2002.
The pair does look stretched to the downside, so a rally back towards the 50-day simple moving average (SMA) might occur, creating a lower high and leaving the downtrend firmly intact.
![EUR/USD chart](http://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/content-2-chart-images/EURUSD_120722.png/jcr:content/renditions/original-size.webp)
GBP/USD suffers further losses
The flight to the US dollar has put pressure on the pound too with GBP/USD, which continues to touch fresh post Covid-19 pandemic lows. Yesterday’s reversal marked the outbreak of fresh risk-off sentiment, which looks set to drive the pound to new lows for the year.
The pair has dropped back below $1.20 and pushed on below $1.19 yesterday. The lows of March 2020 below $1.15 continue to beckon.
A short-term recovery would head towards trendline resistance from June’s $1.26 level. This should come into play towards $1.20 in the event of a bounce, although a more bullish medium-term view requires a move back above $1.24.
![GBP/USD chart](http://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/content-2-chart-images/GBPUSD_120722.png/jcr:content/renditions/original-size.webp)
AUD/USD continues to drop after Monday’s fall
The atmosphere has turned back to risk-off after last week’s short bounce for risk assets, although the move up for AUD/USD was relatively limited.
Monday’s session saw a sharp drop that took the pair back below $0.68, and sets it on course for $0.667 and then $0.649. The downtrend looks to be gathering pace, but a recovery above $0.687 might at least signal that a short-term low has been reached.
![AUD/USD chart](http://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/content-2-chart-images/AUDUSD_120722.png/jcr:content/renditions/original-size.webp)
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