Euro retreats below 1.04, dollar gains
Russian gas move adds to euro39;s woes
Yen set to snap nineweek losing streak

LONDON, May 13 Reuters The euro hovered near its weakest point since early 2017 on Friday after Russian sanctions led to disruptions in gas supplies to Europe, renewing fears about an economic slowdown in the euro zone.

The single currency has been battered in recent weeks by a combination of fears for the economy suffering from the fallout of the war in Ukraine, and a huge rally in the U.S. dollar fuelled by bets the Federal Reserve will deliver a series of big interest rate hikes to tame inflation.

While investors expect the European Central Bank to lift rates out of negative territory this year, yields in the euro zone will lag the United States by a significant margin. Predictionsfrom investors and analysts that the euro could fall to parity with the dollar are growing louder.

On Friday, the euro ceded earlier gains to drop 0.1 to 1.0373 , close to the 1.0354 level it hit on Thursday, its lowest since early 2017. The euro is down 1.6 versus the dollar this week.

In the very shortterm, it39;s difficult to see what is going to turn around the eurodollar bearish trend, said Lee Hardman, a currency analyst at MUFG. Hardman reckons the euro could fall below parity with the dollar within weeks or even days on the back of more bad news.

Unless the Ukraine risks start to recede, it is going to be very difficult for the euro to move much higher….