The euro slumped to a two-decade low on Tuesday as the latest spike in European gas prices added to worries about a recession, while the dollar was unstoppable as US Treasury yields rebounded.

Some currencies are under pressure. The euro's initial fall of 0.8% took it to its weakest level since late 2002, the Japanese yen is nearing a 24-year low, while the Norwegian crown shed 1% as gas workers went on strike.

MUFG's head of global market research, Derek Halpenny, said the risk of Europe's slipping into recession was likely to grow after the 17% jump in natural gas prices in Europe and the UK.

Worries about how the European Central Bank will react also undermined sentiment after Germany's Bundesbank chairman Joachim Nagel lashed out at the ECB's plans to try and protect heavily indebted countries from sharp increases in lending rates.

It will continue to be very difficult for the EUR to rally in any meaningful way with the energy picture deteriorating and risks to economic growth increasing significantly, said MUFG's Halpenny.

The Euro's Decline Against the Dollar

Even the Australian dollar failed to gain traction despite the country's first back-to-back 50 basis point rate hike overnight, which also cemented the fastest rate hike there since 1994.

Having so many central banks raise these big gains that you now get talk of reverse currency wars, referring to where central banks need to raise interest rates just to stop their currency from falling.

This could be worrying for some currencies he added, especially if the US Federal Reserve pushes for a big interest rate hike in the coming months as expected. A stronger dollar, meanwhile, sent the yen back down to a 24-year low.

The euro struggled to regain ground on Thursday, after falling overnight against a resurgent US dollar, which benefited from safe-haven demand amid renewed concerns about higher interest rates and a global recession.

The euro was at $1.044, having lost 0.75% on the dollar the day before, and heading for a 2.7% monthly decline. A steady and aggressive global shift to tighter policies has fueled recession fears and roiled financial markets in recent months.

It also fell to a fresh 7-1/2-year low versus the Swiss franc at 0.99663 francs, with the Alpine currency another beneficiary of safe-haven flows and also still enjoying the vestiges of the Swiss National Bank's two surprise rate hikes last week.

Christopher Wong, attributed the euro's decline against the dollar to markets moving away from riskier assets after central bankers warned inflation was enduring and that they would prioritize fighting it, resulting in a broad dollar rebound overnight.

Factors That Make the Euro Weak

Speaking at the European Central Bank's annual conference in Sintra, Portugal, US Federal Reserve Chair Jerome Powell said it was important to bring inflation down, even if it meant economic suffering, with similar remarks from ECB President Christine Lagarde.

Lower German inflation figures also briefly weighed on the euro, said the head of FX strategy Ray Attrill at National Australia Bank, before markets realized that there were some particular factors there.

The bigger picture concern is what happens to energy supplies in the eurozone as we head into winter and are quite cautious about the euro, Attrill added.

The dollar was also in the lead against other major currencies, with sterling down at $1.21225, with this week's losses making it down 3.8% monthly, while the Australian dollar struggled at $0.6873.

The dollar also hit a fresh 24-year peak of 137-yen overnight, as the gap between the hawkish Fed and the dovish Bank of Japan continued to weigh on the yen.

The BOJ was able to keep interest rates on hold as Japanese inflation remains low by global standards, although even a small price increase causes messaging problems for the central bank.