EUR/USD Slumps as Rising Yields and Oil Prices Weigh on Eurozone

The EUR/USD forecast is looking increasingly bearish due to a combination of factors. Rising US Treasury yields, driven by expectations of a more hawkish Federal Reserve, are supporting the dollar. The 10-year Treasury yield has surpassed 5% for the first time since 2007, while Brent crude has climbed to around $107 a barrel.

The surge in oil prices is adding to inflation concerns and making rapid monetary easing harder to square with the market backdrop. This has led to a sharp deterioration in the bond-market backdrop, with German Bund yields reaching a 15-year high.

As a result, European equities are feeling the pressure, with major indices extending their declines today. The renewed Houthi attacks on Saudi Arabia have intensified concerns about disruption to Middle Eastern energy supplies.