The threat of a recession in the euro zone | 06 Juli 2022

06 Juli 2022, EUR/USD

The threat of a recession in the euro zone

EURUSD trading plan:

The dollar surged to its strongest level in more than two years as growing concern about recession prompted investors to pile into haven assets. The risk of Europe sliding into a recession rose after a big 17% jump in natural gas prices in both Europe and Britain looked set to push inflation even higher. Concerns about how the European Central Bank will react eroded sentiment after German Bundesbank chief Joachim Nagel hit out at ECB plans to try to shield highly indebted countries from surging borrowing rates. The threat of a recession in the euro zone is a clearer risk now relative to before. The euro's decline is just a warning sign as to what might happen later this month if Russian gas to Germany is shut off, a move that could push the currency to breach parity and fall toward $0.99 in September.

Investment idea: sell 1.0300 and take profit 1.0220.

David Johnson
Analyst of «FreshForex» company
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