Dollar Hits 20-Yr Highs; Stocks Continue Bleeding

On Friday, US equity indices dropped to their previous lows as the selling pressure remains intact amid fears of unstoppable inflation and hawkish Fed. 

Troubles in Europe

In a newspaper interview over the weekend, Austrian central bank governor Robert Holzmann, a noted hawk, suggested the ECB should raise interest rates three times this year to battle inflation. However, that seems rather unlikely, considering the actual stance of the ECB. Markets are also not pricing in three hikes in the eurozone at the moment.

Later Monday, European Union leaders will gather again to discuss ways to guarantee those nations most reliant on Russian energy, such as Hungary, Slovakia, and the Czech Republic, can manage with the planned embargo on Russian oil. All EU members must approve the plan.

Additionally, the Sentix Investors Confidence for May is due, expected to decline further as problems in the EU continue to mount.

In other news, China's trade surplus grew to 51.12 billion USD in April, according to figures released during the Asian session. Imports decreased by 2% year over year, while exports climbed by 3.9%.

Dollar Strongest in 20 Years

The USD dominance continues, pushing the EURUSD pair below 1.05, the cable below 1.2250, and USDJPY toward 131.50. At the same time, the dollar index moved above 104 for the first time since December 2002.

As traders expect more and more hikes in the following months, the USD strength might continue uninterrupted.