The dollar started the week down from multi-year highs, with higher-than-expected inflation in New Zealand providing modest support for the kiwi, although fears over Europe’s gas supplies limited expectations. dollar sales.

The greenback has soared this year thanks to a combination of rising US interest rates and faltering economies in Europe and China. It pushed above parity on the euro for the first time in nearly 20 years last week, before falling back.

The euro last bought $1.0094 and the yen, which has fallen around 17% this year, stabilized at 138.29 to the dollar. The New Zealand dollar and Aussie edged higher after inflation hit a three-decade high in New Zealand.

Traders are holding their breath ahead of Thursday, when gas is expected to resume flow through the Nord Stream pipe from Russia to Germany after a shutdown for scheduled maintenance.

“If that doesn’t happen it would be a very bad thing for many currencies,” said Joseph Capurso, head of international economics at Commonwealth Bank of Australia, with the euro likely to be the biggest loser. and the dollar a beneficiary. .

The uncertainty overshadows a meeting of the European Central Bank, also scheduled for Thursday, where policymakers are expected to start Europe’s bullish cycle with a 25 basis point (bp) hike.

The Bank of Japan also meets on Thursday, although no policy changes are expected, which could mean more pain for the beleaguered yen, as Japan hit a lonely high setting interest rates near zero.

Upside expectations firmed up a bit in Australia and New Zealand after data released on Monday showed New Zealand inflation hit a three-decade high in the last quarter.

At 7.3% year-on-year, price growth beat expectations, lifting two-year swap rates by almost 10 basis points and rising the kiwi by 0.5% to a one-week high of $0.6191.

The Australian dollar rose 0.3% to $0.6814.

The pound rose 0.2% to $1.1890.

The US Dollar Index held steady at 107.830, just over 1% below the two-decade high of 109.290, although few still seem willing to call a spike in Dollar gains.

The Federal Reserve meets later in July and is expected to raise the benchmark US interest rate by 75 basis points. While this is more cautious than the 100 basis point rise that markets had been anticipating at some point last week, it’s still a pretty strong increase.

“There has been a fixation on how the dollar is about to weaken,” HSBC analysts said in an outlook report that instead raised the bank’s dollar outlook broadly.

“Too much attention has been paid to the fragilities of the dollar but not enough to those that are rising elsewhere, resulting in an overvalued dollar.

“Global growth is slowing and downside risks are intensifying, which is positive for the dollar…this bull run for the dollar is not over yet.”