Euro declines to 20-year lows as Europe's trade deficit mounts

Euro declined in European trade to 20-year lows against dollar for the third straight session, about to pierce 1.030 as Europe's trade deficit mounts as energy costs climb and demand on European commodities tumble. 

The dollar hit fresh 20-year highs on resurgent haven demand on the greenback. 

EUR/USD fell 1.1% on Tuesday to 1.0298, the lowest since December 2002, after losing 0.1% yesterday following weak German data. 

Trade Deficit 

Germany marked the first trade deficit in over 30 years last month on surging energy import costs and tumbling trade volumes to Russia and China. 

Overall, the euro zone's current account has plunged considerably and market a deficit of 5.8 billion euros in April. 

Such a bearish direction for trade in Europe weighs heavily on the ECB and his policies, and in turn on the euro. 

The Dollar

The dollar index rose 0.9% today for a third session, marking fresh 20-year highs against major rivals. 

The gains came as Fed Chair Jerome Powell asserted efforts to control runaway inflation even if it caused economic pain. 

Estimates

We now expect further losses for the euro, potentially giving up 1.03 against dollar and targeting 1.020.