Back in February, the EUR/USD pair was trading around 1.1500, and its fall to parity could only be seen by bulls in terrible dreams.

However, a series of events followed that sent the single currency into a downward spiral, which only became faster and tighter over time.

And now EUR/USD is at levels last seen in December 2002, and currency traders are preparing for a world in which one euro is worth less than a dollar.

The US statistical data released at the end of the last five days showed that the number of jobs in the country's economy increased by 372,000 in June against 384,000 recorded in May. Experts on average predicted an increase in the indicator last month by 268,000.

It is noteworthy that stronger than expected data on US employment did not contribute to the strengthening of the greenback.

Apparently, market participants were "selling facts", consolidating profits, since USD had previously broken several records twenty years ago.

As a result, the dollar showed small losses, allowing its European counterpart to defy gravity.

The single currency approached the psychologically important milestone on Friday, which is parity with the greenback, but closed in positive territory, adding about 0.2%.

Nevertheless, at the end of last week, the EUR/USD pair lost almost 250 points and finished around 1.0180.

Then it turned downward on Monday, failing to develop a modest Friday rebound.

The greenback is gaining momentum at the beginning of the new week due to the continuing demand for safe havens.

Fears of a global recession continue to prevail in the market, creating a pessimistic background for risky assets.

Commonwealth Bank of Australia strategists believe that the USD index may rise above 108 points this week as the global economic growth forecast worsens.

A similar opinion is shared by ING analysts, who note that the dollar starts the new week on a strong basis.

"We think that the general signal for the markets is that further aggressive policy tightening by the Fed remains justified, which should strengthen the favorable underlying narrative for the US currency. The USD index could easily rise above 108.00 this week," they said.

In the absence of important macroeconomic data on both sides of the Atlantic on Monday, the EUR/USD pair remains at the mercy of the dynamics of the dollar.

Now the USD is getting more expensive against the euro, because natural gas prices are rising, and Europe is sitting on a powder keg and is afraid that Russia will completely block its supply of blue fuel at any moment.

In this scenario, Germany will face consistently high energy costs. Obviously, it will have to rely less on heavy industry and chemical plants running on cheap Russian gas.

Europe is suffering the most from the conflict between Kiev and Moscow, which has provoked an energy crisis and could potentially lead to a long and deep recession in the region.

According to the forecast of experts interviewed recently by Bloomberg, the probability of an economic downturn in the eurozone increased from 20% before the start of the Russian special operation in Ukraine, and from 30% in the previous survey to 45%.

"For any energy-intensive industry, the United States now looks more attractive. Competitiveness has increased in America, the terms of trade have improved," Capital Economics analysts said.

"Given that the June US inflation data is likely to mark a new high for the year, and the Fed will continue to aggressively raise rates, we believe that the risks remain biased in favor of the dollar. Indeed, we think that the EUR/USD rate will soon break through parity and may well somehow break through this level," they added.

According to forecasts, consumer prices in the United States rose by 8.8% year-on-year last month against an 8.6% rise in May.

Further acceleration of inflation will contribute to an increase in the Federal Reserve's key rate by 75 bps at the July FOMC meeting. This should support the dollar, CBA analysts say.

The futures market estimates a more than 90% probability that the federal funds rate will be increased by 0.75% in July. The chances that the US central bank will raise the cost of borrowing by a similar amount in September are 30%.

On Monday, the USD index updated almost 20-year highs, rising above 107.90 points.

If the upward momentum continues, the dollar bulls' next target will be the round level of 108.00 on the way to the October 2002 high at 108.75.

As long as the index is trading above the five-month support line around 102.85, the near-term prospects for the greenback should remain constructive.

To turn the dollar around, some kind of powerful trigger is needed: a peace deal in Ukraine that will return cheap gas to Germany, or maybe an unexpected turn of the Fed towards monetary stimulus.

"In the current climate of risk aversion in the markets, the US dollar rally is likely to continue in the near future. But, in our opinion, this strength is unlikely to persist in the long term," UBS strategists believe.

"Further USD growth potential is likely to be limited by the slowdown in economic growth in the United States and market expectations that the Fed will start cutting rates again in 2023," they noted.

So far, the greenback benefits from its status as a safe haven asset, which means that as the military conflict in eastern Europe is prolonged and its consequences worsen, the single currency will continue to fall.

In addition, the dollar benefits from the continuing difference in interest rates on both sides of the Atlantic.

While the Fed has raised the interest rate by 150 basis points in just three months, the European Central Bank has not yet taken any action, keeping the deposit rate in negative territory.

Friday's EUR/USD rebound left what could be a bit of a hammer reversal pattern on the charts.

However, the euro quickly lost the points gained at the end of last week.

The single currency reached a new multi-year low around $1.0060 on Monday.

"We do not believe that this week the EUR/USD pair will quickly reverse its current bearish trend. Most of the key factors of the recent weakening of the pair (investor sentiment towards risky assets and the divergence between the policy courses of the Fed and the ECB, to name two of them) are still in force, and lingering concerns about a reduction in Russian gas flows to the EU should continue to make the euro quite unattractive," ING analysts said.

"Recently, the possibility of the EUR/USD pair reaching the parity level has been actively discussed, and given the continuing downside risks mentioned above, the chances that this will happen this week are quite high," they added.

However, in the current conditions, achieving euro parity with the dollar may turn out to be a timid forecast.

"Now it seems only a matter of time before the EUR/USD pair falls below parity. The main factor in the weakening of the euro continues to be the growing concerns about the intensification of disruptions in European economies due to a reduction in energy supplies," MUFG reported.

"Under these conditions, we expect that the bearish trend in the euro will continue. The weakening of the single currency may even accelerate when the EUR/USD pair falls below parity and the door opens for trading between 0.9500 and 1.0000," the bank's analysts noted.

Other strategists are also wondering where the "bottom" is.

Deutsche Bank analysts believe that the euro's fall against the US dollar to $0.95-0.97 will correspond to the historical extreme fluctuations observed in the currency markets after the completion of the Bretton Woods in 1971.

Meanwhile, Nomura analysts warn of a "non-linear" fall of the single currency to $0.95.

"The euro may first test the support levels established in 2002, from about $0.9613 to $0.9863. But further, there will probably be few barriers to contain the fall of the EUR amid the deterioration of the macroeconomic situation in the eurozone," they said.