September 6, 2022: -The Euro fell below 99 cents for the first time in 20 years Monday after Russia said it would indefinitely shut off its main gas supply pipeline to Europe.

The EU’s common currency was trading around 0.9911 versus the dollar by 10:00 a.m and London time (5:00 a.m. ET), having climbed off lows of $0.9881 earlier in the day.

The dollar index, measuring the greenback against six major currencies, also breached a fresh two-decade high as the British pound slid on fears over energy supply and European economic growth.

On Friday, Russian energy supplier Gazprom said it would not resume its natural gas supply to Germany through the critical Nord Stream 1 pipeline, blaming a malfunctioning turbine. The announcement was made hours after the Group of Seven economic powers agreed on a plan to implement a price cap on Russian oil.

The front-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, was nearly 30% higher Monday morning, hitting 282.5 euros per megawatt hour.

It comes ahead of a meeting of the European Central Bank Thursday when economists expect it to raise its benchmark deposit rate from 0 to 0.5% or 0.75% against a backdrop of concern over Europe’s ability to meet its energy needs this winter and the potential for a hit to growth.

“We expect that Russia is respecting the contracts that they have, but even if the weaponization of energy will continue or will increase in response to our decisions, I think that the European Union is ready to react,” Paolo Gentiloni, the EU’s economics commissioner, told CNBC over the weekend.

“Of course, we have to save energy, share energy, have [a] high level of storage, and are not afraid of Putin’s decisions.”

Viraj Patel, the global macro strategist at investment advisory Vanda Research, said many investors were seeking to short the Euro and European government bonds, which have seen a spike in yields over the last month on the expectation of interest rate rises.

“These markets are selling off on any bad news related to the Russia gas flows narrative, while reluctant to rally on any marginal improvement in the energy crisis,” Patel said.

Although, Patel added that terrible news could become good news for under-owned European assets.

“The market is under-appreciating the chance for policy intervention from government officials helping to reduce stagflation risks on the continent,” he said, meaning the case for a euro rise to 1.05 against the dollar now looked equal to, if not greater, than the case for a fall to 0.95.