The US and its allies’ war with Russia is cutting them deep, and the evidence of this can be seen quickly by looking at the natural gas prices. This is a one-way trade that has been moving in one direction only, and that is to the upside.
Gazprom (MCX:GAZP) announced it would again be closing Nord Stream One for “maintenance” for three days starting from the end of this month. Traders know this will not stop here as this is only a beginning, and Russia is going to play this game with Europe a lot more now, especially since summer has come to an end and winter is just around the corner.
Foreign Exchange
The forex market is the one to watch, as yesterday we saw the dollar index picking up more strength and reaching its best level in nearly 20 years. Traders are betting on one thing and one thing mainly: the Fed in the US is going to stay on the hawkish monetary policy path, and the interest rates in the US are going to continue to move higher.
When we look at the dollar against the euro, the strength of the dollar index becomes even more prominent. This is because euro is the currency getting battered by traders as they believe that the Eurozone will face a lot more difficult time and recession is not avoidable here.
This is why we saw the EUR/USD drop to its new low this year and below parity. Given that the EUR/USD is sitting at a level we have not seen for over a decade, it seems that traders do not have the stomach to take the other side of the trade, which is buying the euro. Most believe it is a losing trade, which has left the euro in a free fall.