Euro teeters on the brink of parity with the U.S. dollar on recession fears

A financial trader monitors data on computer screens as a desktop television shows euro currency banknotes at the Frankfurt Stock Exchange in Frankfurt, Germany.

The euro hovered close to the U.S. dollar on Tuesday as the euro zone's energy supply crisis and economic troubles continued to depress the currency.

At 9:35 a.m., the euro was down by 3.0%. There is time in London on Tuesday.

Fears of a recession have grown due to rising uncertainty over the bloc's energy supply, with Russia threatening to further reduce gas flows to Germany

The prospect of a sharper economic downturn has cast doubt on whether the European Central Bank will be able to tighten monetary policy aggressively enough to rein in high inflation.

It is a key psychological level which is very much under threat.

The euro could fall below this level as a result of growing recession fears in the euro zone. Concerns about the possibility of a permanent cut to Russian gas supplies and the pace of monetary policy tightening by the European Central Bank are growing.

The European Central Bank is in a very difficult situation. The European Central Bank has been late to the party both in terms of ending their bond purchases and considering monetary policy tightening.

He said inflation expectations had retreated toward the central bank's target threshold after the last meeting of the European Central Bank.

The need to act and to act quickly is clear, and that is one sign that inflation expectations aren't necessarily becoming deanchored.

The news story will be updated soon.