Sept 8 (Reuters) - The price of natural gas, which has risen swiftly to a near four-year high since June, could weigh on EUR/USD.

The euro zone imports almost 90% of its natural gas needs, as well as all of its liquefied natural gas (LNG). The United States is the dominant LNG supplier. LNG prices have almost doubled since June.

During the period in which gas prices have surged, EUR/USD rallied from 1.1353 on June 24 to 1.1711 on August 21, before settling near 1.1600 in September. Traders who were short almost €9 billion pared their bearish positions to around €3 billion in the first week of September, leaving them less prepared for a decline that could result from higher gas prices.

Although the price increase following Russia's invasion of Ukraine in 2022 was far greater — causing the euro zone's current account to swing sharply from surplus to deficit — the scale of this year's move is still significant. A Middle East conflict that was expected to last weeks has instead endured for almost seven months, providing sufficient reason to hedge the growing risk that changes in trade and capital flows could seriously undermine the euro.

EURUSD and natural gas

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)