Dollar gains, euro falls as energy drives currency swings

* Euro falls to below $1.02 for first time since 2002

* U.S. dollar index rises to new 20-year high

* Swiss franc reaches a 7-year high vs euro

* Yen strengthens after Japan's inflation expectations rise

* Graphic: World FX rates Link

By Herbert Lash

July 6 (Reuters) - The dollar rose to fresh 20-year highs on Wednesday and the euro tumbled to a new two-decade low as rising energy prices cast a long shadow over the euro zone's economy but bolstered the U.S. currency's safe-haven appeal.

The dollar and euro were little changed after the release of minutes from the Federal Reserve's meeting in June, when the U.S. central bank hiked interest rates by an outsized 75 basis points in an effort to corral inflation.

Earlier, the dollar index =USD , which tracks the greenback against six currencies, shot above 107 while the euro tumbled below $1.02, both levels last seen in December 2002. The index is up 12% year to date and is set for its best year since 2014.

The dollar has strengthened as energy prices are high and the Federal Reserve has been raising interest rates more quickly than most other central banks, said Shahab Jalinoos, global head of macro trading strategy at Credit Suisse.

"You have traditional macro factors that are driving dollar strength right now rather than a risk-adverse move," Jalinoos added.

The United States is a net energy exporter, while Germany is running a trade deficit for the first time since 1991, Jalinoos said.

"High interest rates in the U.S. and a trade shift which is beneficial to the U.S. adds to sustainability of the dollar’s strength," Jalinoos added.

The dollar index =USD rose 0.498% to 107.04, with the euro EUR= down 0.8% to $1.0184. The index hit a high of 107.27 and the euro slipped 1% to a low of $1.063 earlier.

Goldman Sachs raised its natural gas price forecasts, saying that a complete restoration of Russian gas flows through Nordstream 1 was no longer the most likely scenario.

All oil and gas fields that were affected by a strike in Norway's petroleum sector are expected to be back in full operation within a couple of days, Equinor EQNR.OL said on Wednesday.

Analysts expect a quick resurgence in oil prices as supply tightness persists and as front-month spreads have held up despite Tuesday's price fall.

"It is not only the threat of nondelivery (of gas) that is weighing on the euro," said Moritz Paysen, forex and rates adviser at Berenberg.

"The already-high energy costs are a burden. Energy costs in Europe are many times higher than in the U.S.," Paysen added.

The divergence between central banks' tightening cycles across the Atlantic remained in investors' focus.

The euro dropped to its lowest level against the Swiss franc EURCHF= since the Swiss National Bank abandoned its currency cap in 2015.

The single currency fell 0.6% to a fresh seven-year low at 0.9879. EURCHF=

The yen gained a little support from some safety bids after Japanese households' inflation expectations strengthened in the three months to June, with the ratio of homes expecting price rises over the coming year hitting the highest level in 14 years.

The Japanese yen weakened 0.03% to 135.92 per dollar.

Bank of Japan has said it would not withdraw monetary stimulus because inflation is due to soaring fuel and raw material costs blamed on Russia's invasion of Ukraine and will likely prove temporary.

Bitcoin BTC=BTSP last rose 1.2% to $20,409.69.

Currency bid prices at 2:45PM (1845 GMT) Description



U.S. Close Pct Change


High Bid

Low Bid




Dollar index


107.0400 106.5300



+107.2700 +106.3400 Euro/Dollar







+$1.0162 Dollar/Yen


135.9450 135.8800



+135.9950 +134.9500 Euro/Yen






+139.5000 +137.2800 Dollar/Swiss







+0.9672 Sterling/Dollar GBP=D3






+$1.1877 Dollar/Canadian CAD=D3






+1.3013 Aussie/Dollar







+$0.6762 Euro/Swiss







+0.9876 Euro/Sterling







+0.8533 NZ







+$0.6132 Dollar/Dollar








+10.0220 Euro/Norway







+10.2644 Dollar/Sweden







+10.4678 Euro/Sweden







Reporting by Herbert Lash in New York Additional reporting by Stefano Rebaudo Editing by William Maclean, Will Dunham and Matthew Lewis

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.