The euro has dropped to its lowest level since 2017, amid investor concerns over Russia’s decision to halt gas supplies to Bulgaria and Poland.

The Kremlin’s decision to cut off the supply of gas to Bulgaria and Poland for failing to meet its demand for payment in rubles was a direct shot at European economies, and one that hit the mark.

The euro slumped as investors cast their eyes to the US dollar in the face of uncertainty.

The dollar has risen by more than 4% in April, and is set for its best month since January 2015. Investors expect the US economy to fare better than its European counterparts in the face of Russian military action in Ukraine, with planned Fed rate hikes likely to keep inflation under control.

The euro dropped below $1.06 with another half a percent fall as investors moved away from the asset. Daily Insider News reports that the move reflects growing concerns that the Eurozone will fall into recession this year, fueled by the continued Russian aggression in Ukraine and fears over supply chain disruption due to Covid lockdowns in China.

The effects of the Chinese lockdowns are already being felt, with a number of firms reporting shortages of items essential to their businesses. At present no major firm has felt the need to review its output targets, but several have warned this will be necessary soon if Chinese authorities don’t ease restrictions.

European stocks initially fell following some mixed corporate earnings reports, before rebounding modestly. In the US the Nasdaq 100 closed down 3.3%, its lowest level since the end of 2020.