Gas prices in Europe jumped above $2,400 for the first time since March 8 amid increased demand for electricity. The EUR/USD fell below 1.02 again, hitting weekly lows. The recent bounce in the euro is a selling opportunity, according to TD Bank. European gas prices topped $2,400 on Monday, hitting late-July highs amid record heat in the region. Daily growth exceeded 11%. Due to the abnormal heat, the demand for electricity to power fans and air conditioners has risen sharply, writes RBC. In Europe, hot weather without precipitation has been observed for several weeks in a row. In addition, very low water levels at key points on Europe’s rivers make it difficult to transport diesel, coal and other goods, including those used to power power plants. Water levels in the Rhine River fell to a new low of 30cm on Monday, according to the German government, and are forecast to hover just above that level throughout the week. The Rhine is the most important river in Western Europe for transporting fuel. As a result of falling water levels, the river may become unnavigable in the coming days. There are also concerns about supplies from Russia. Since mid-June, Gazprom has been consistently reducing pumping through Nord Stream, the main route for pipeline gas supplies to Europe. The European Commission, under the circumstances, in turn, proposed a plan to voluntarily reduce fuel demand by 15%. The bounce in the euro has provided selling opportunities to reach parity, according to Toronto Dominion Bank, adding that it is not yet time to short the dollar. The bank’s model sees the USD as too cheap against the euro due to the importance of European factors. The euro will fall as the Fed is more likely to meet market expectations for a rate hike than the ECB, HSBC believes. It is hardly worth expecting that the Fed will abandon the policy tightening after a single decline in inflation in July. “The Fed has much more room to tighten policy than energy crisis-stricken Europe. Fed officials, including the most dovish ones, continue to convince the market that easing is not to be expected and the cycle of increases is far from over, ”the FxPro analyst team notes. Source: FXPro

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