Euro drops to lowest level since end of 2002Dollar rises on safe-haven demandYen sinks near 24-year lows againNEW YORK/LONDON, July 5 (Reuters) – The euro slumped to a two-decade low on Tuesday as the latest surge in European gas prices added to the region’s recession worries, while safe-haven demand for U.S. Treasuries strengthened the dollar.Many currencies were under pressure. The euro’s 1.5% drop took it to its weakest since the end of 2002. Japan’s yen was near 24-year lows again, while Norway’s crown tumbled 1.2% as gas workers there went on strike. read more The risk of Europe sliding into a recession grew after another big 17% jump in natural gas prices in both Europe and Britain looked set to push inflation even higher. read more Register now for FREE unlimited access to Reuters.comRegisterConcerns about how the European Central Bank will react eroded sentiment after German Bundesbank chief Joachim Nagel on Monday hit out at the ECB’s plans to try to shield highly indebted countries from surging borrowing rates. read more “It will continue to be very difficult for the euro to rally in any meaningful way with the energy picture worsening and risks to economic growth increasing notably,” said MUFG’s head of global markets research Derek Halpenny.Traders told Reuters there had also been a major dollar order in early trading, perhaps as U.S. markets were closed on Monday for the Fourth of July holiday.One said that coupled with the energy price angst it caused a chain reaction, spilling into both equity and bond markets and then speeding the euro’s fall as it broke through its 2017 low of $1.0340.The heavy volatility also saw the euro drop to the lowest against the Swiss franc since the Swiss National Bank abandoned its currency cap in 2015. It fell against sterling too, although the pound’s own economic and political worries had left it below $1.20 again.With the euro trading at two decade lows, volatility has jumped and trading in options has increased, said Marc Chandler, chief market strategist at Bannockburn Global Forex.”Whether it is to play for the downside like a speculative move or whether it’s a hedge against long euros, I can’t tell you,” Chandler said.The Australian dollar fell despite the country’s first back-to-back 50-basis point interest rate hike in recent memory overnight, which also cemented the fastest run up in rates there since 1994. read more The Aussie slid 1.4% to $0.677, after trading as high as $0.6895 earlier in the day. It is now down nearly 7% this year.”We have had so many central banks hiking in these big increments that you are now getting talk of reverse currency wars,” said Rabobank FX strategist Jane Foley, referring to where central banks need to hike rates just to stop their currencies from falling.”It could get concerning” for a number of currencies, she added, especially if the U.S. Federal Reserve pushes ahead with large rate hikes in the coming months as expected.The dollar’s strength, meanwhile, nudged the yen back down toward a 24-year low. It was last at 135.825 per dollar.Eastern Europe was also feeling the heat as its countries are some of the most dependent on Russian gas. MSCI’s main EM FX index hit its lowest since November 2020 with Euro-linked currencies such as the Hungarian forint , Polish zloty and Romanian leu down 1.6-2.3% against the dollar.Currency bid prices at 10:08 AM (1408 GMT)Register now for FREE unlimited access to Reuters.comRegisterAdditional reporting by Danilo Masoni in Milan and Sruthi Shankar; Editing by Jacqueline Wong, Bernadette Baum, Angus MacSwan and Deepa BabingtonOur Standards: The Thomson Reuters Trust Principles.