The euro sinks below parity against the dollar as Gazprom pipeline shutdown stokes recession worries

The euro fell below the US dollar on Monday due to fears over a gas shortage in Europe. The Federal Reserve was expected to stress its aim of controlling high inflation at its symposium in Jackson Hole.

The euro fell for the second time in a month and the second time this year against the US dollar. The latest move came after Russia's state-run energy company Gazprom unexpectedly said it would close theNord Stream 1 line for maintenance between August 31 and September 2.

Natural gas prices in Europe shot up Monday and the move by Russia's OAO Gazprom stirred speculation about a long-term shut-down of the main conduit for Russian gas to Europe.

The energy shock seems certain to cause Europe to go into a recession, according to a Monday note by the chief market strategist at Bannockburn Globalforex.

The eurozone's preliminary reading on August industrial and services activity was due Tuesday and a recovery of the $1.0050-60 area is needed for the euro to be stable. The index is expected to show a decline.

The euro has lost 12% of its value against the US dollar this year as a result of Russia's actions in Ukraine. As the winter season approaches, European officials are trying to manage soaring energy prices.

As the Federal Reserve has increased interest rates, the euro has fallen. Fed officials will gather in Jackson Hole, Wyoming, this week for a conference and a speech by the Fed Chairman on Friday.

Powell is expected to focus on swaying market expectations to reflect that the Fed isn't ready to signal a rate cut.

Powell is likely to sound determined to beat inflation. The impact so far has been to spark a very sharp rise in global bond yields which, along with last week's soft Chinese data, send global equity prices into a bit of a rut and gave the dollar a big boost. It looks like the talk of the dollar having peaked is tired.

Inflation in the US ran at a hot rate of 8.5% in July, even though it cooled from 9.1% in June, a 41-year high. Powell will be speaking at 10 a.m. It goes all the way up to the Eastern time zone.