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On Tuesday the Euro suffered its largest one day fall against the Dollar since the height of the Covid market panic of March 2020.

The Euro to Dollar exchange rate fell 1.47% to close the day at 1.0264 amidst a surge in European gas prices and a rapid reappraisal by market participants as to how many interest rate hikes the European Central Bank can afford to deliver given fears for rapidly falling economic growth in the region.

Daily declines of such a magnitude could trigger further losses or be a final blow-out move that heralds the end of a period of decline, as was the case on March 19 when a 2.0% fall gave way to a steady uptrend that saw Euro-Dollar go from 1.0654 to 1.20 by August.

But Mensur Pocinci, Head of Technical Analysis at Julius Baer, the Swiss bank, says he is inclined to favour further downside.

"The EUR/USD fell to a new 19-year low and European equities are at risk of retesting their March lows – stay underweight in Europe," says Pocinci.

"The EUR/USD has fallen to a new 19-year low and is now likely to fall below parity after avoiding the final move lower in 2015, 2017, and 2020. Looking at the momentum readings, we are seeing new lows, which indicate continued strong selling," says Pocinci.

He adds that in this instance the path of least resistance remains for a lower Euro against the U.S. dollar and also the Swiss franc.

The British Pound, Euro and other European currencies have come under immense selling pressure over recent hours and look set to remain vulnerable to further losses against the Dollar as Europe's energy crisis deepens.

Norway has warned gas supplies to the UK could be shut off as soon as this weekend if a workers' strike escalates to more gas fields, with up to 60% of the country's supplies said to now be under threat.

This is a significant development for the Euro and British Pound given Norwegian gas can only access the European market via the UK.

"Fears of a gas crisis are overshadowing everything," says Ulrich Leuchtmann, Head of FX and Commodity Research at Commerzbank. "A gas supply crisis would be an Europe-specific problem."

Leuchtmann is another analyst saying a fall below 1.0 in Euro-Dollar could now be a feasible expectation.

"It seems clear that the prospects for Europe are not rosy at present. If authorities are putting together plans to supply private households with gas for only a few hours per day and when public authorities call on companies to provide emergency generators, it is not a time for EUR strength," says Leuchtmann.

The Norwegian gas field strikes come alongside news Russia is further squeezing supplies to Europe with the closure Tuesday of the Yamal pipeline.

The Nordstream 1 pipeline was meanwhile seeing flows reduced further ahead of a full scheduled shutdown in coming days.

"Nordstream 1 will undergo maintenance beginning July 11, and there’s a good chance that it might not come back on-line. As of last week, flows were 60% lower than where they were for most of 2021," says Bipan Rai, Head of North American FX Strategy at CIBC Capital Markets.

"A gas supply crisis would be a Europe-specific problem," says Leuchtmann. "I can only repeat: if it does happen, I expect EUR-USD levels below parity."