The euro fell to its lowest level in almost 20 years on Monday.

The price was last below the current USD 1.033 on Christmas 2002. Investors are betting that the interest rate hike in the ECB will be less pronounced due to an impending recession.

The money markets are currently only pricing in an interest rate hike of 1.4 percentage points this year.

Three weeks ago it was 1.9 percentage points.

This would widen the interest rate differential with the US central bank again, making the dollar more attractive.

The euro has already lost 8 percent against the dollar this year alone.

The price losses on Tuesday were also due to low liquidity and selling against the Swiss franc, reports the Bloomberg news agency.

Martin Hock

Editor in Business.

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The euro is facing major problems, writes Neil Wilson, senior market analyst at

The European central bank is far from its monetary policy goals and faces the even bigger problem of a fragmentation of the euro area credit markets.

At times of low inflation, ECB President Mario Draghi was able to force the countries of the north to accept a redistribution towards the south through low interest rates.

But the conditions had changed.

Bundesbank President Nagel's critical statements about the ECB's efforts to prevent bond yields from diverging show a division.

The euro bulls are gradually disappearing, says Ipek Ozkardeskaya of Swissquote Bank, because they are increasingly less convinced that the central bank even has a tool to prevent fragmentation.

Inflation in Spain and Belgium had risen to more than 10 percent in June and only an insignificant rate hike of 0.25 percentage point was expected at the next ECB meeting.

So it is no wonder that the exchange rate of the euro against the Swiss franc has fallen below parity - this has only happened once in the history of the euro, namely in January 2015, when the Swiss central bank set the lower limit for the Swiss franc Franconia had surprisingly lifted.

This fundamental weakness of the euro coincides with the strength of the US dollar, which is being supported by global recession concerns.

At 105.8 points, the dollar index, which reflects the dollar's external value against the world's other major currencies, is at its highest level since November 2002. Of course, part of this strength is the weakness of the euro.

Nonetheless, the dollar is always seen as a safe haven when international equity prices fall and risk aversion rises.