Russia's war on Ukraine and its subsequent moves in the energy market have been blamed for the euro's decline.
While the euro has rebounded a bit after falling below parity with the US dollar for the first time in 20 years, an increase in the European energy crisis could cause the currency to plummet.
According to James West, senior managing director at Evercore ISI, a large percentage of the euro's move is due to the energy crisis caused by the Ukrainian crisis.
"It definitely gets worse before it gets better," he said.
If Western sanctions go further, Russian President Putin has warned of catastrophic consequences. As Russia looks to retaliate against Europe's sanctions, the energy industry warns that Putin is willing to weaponize energy supplies.
Prior to the shut off of gas flows to Germany, Moscow had slashed deliveries by more than half. There is a chance that the gas won't come back.
George Saravelos, head of currency research atDeutsche Bank, said that that would cause a near-certain recession in Germany and another big rise in energy prices.
Saravelos warned in a July 6 note that the euro could fall as low as $0.97 against the US dollar.
The recent decline in gas supply to Europe has caused the euro to fall. He said that a strong dollar has contributed to the decline of the euro.
The growing effectiveness of Western sanctions against Moscow could keep Putin from pulling his energy strings, according to an analyst.
Ellis told Insider that the euro's decline can be linked to a higher chance of a deep recession.
Wall Street's forecasts on the euro are being lowered. The euro-dollar target was cut by JP Morgan due to the likelihood of the European gas crisis.
If gas prices go up to 250 euros per megawatt hour, Citigroup thinks the euro will go to $0.95.
The euro is going to fall to either $0.97 or $0.95 as the energy crisis hits Europe's economy, according to the director of the currency team.
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