Monthly exports fell by 0.5% in May from April while imports into the country rose 2.7%. Surging energy prices and supply chain issues led Germany, Europe's largest economy, on Monday to report its first trade deficit since 1991. 'The situation on the gas market is tense and unfortunately we cannot rule out a deterioration in the situation,' Germany's Economy Minister Robert Habeck said in a statement, according to Reuters. Meanwhile, Germany on Tuesday approved legislation that will let the government bailout energy companies strained by the reduced supply of gas from Russia. The euro was hit as European natural gas prices shot up to four-month highs, with investors considering an ongoing strike among oil and gas workers in Norway, the largest producer of oil and gas in Western Europe. Ongoing tensions between Europe and Russia over natural gas supplies means business sentiment in Germany, in particular, is unlikely to improve any time soon.' We have seen consumer, business and investor sentiment all take big hits, with PMIs also falling. 'The weakness is driven by rampant inflation, concerns over energy and rising borrowing costs. 'It is not a secret that the Eurozone economy is not doing great, with the outlook also looking bleaker by the day,' Fawad Razaqzada, market analyst at, wrote in a Tuesday note. The euro has a heavy weighting on the US Dollar Index, of about 58%. The EUR/USD pair fell below the 1.03 handle for the first time in nearly two decades. The index was hurt as the euro fell by 1.7% against the greenback, buying $1.0245.

The US Dollar Index rose as much as 1.4% to 106.64, crossing above the 106 level for the first time since December 2002. A key gauge of the US dollar kicked up to two-decade highs Tuesday, largely fueled by the euro's slump as investors see economic conditions weakening in Europe, with a German data point highlighting slowdown concerns.

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