Dollar Rebound Weighs on EUR/USD Amid Turmoil in Bond and Oil Markets

The EUR/USD forecast is looking bearish as sentiment deteriorates amid turmoil in bond and oil markets. The dollar's recent rebound, driven by rising US Treasury yields and energy prices, has been a key theme in the markets, weighing on major FX pairs, gold, silver, and copper. The euro has been particularly affected, with continued gains in oil prices and a closely-watched German sentiment survey adding to its woes.

The near-term EUR/USD forecast remains tilted to the downside, with a drop below 1.1500 possible heading into the FOMC rate decision on Wednesday. Market pricing suggests a 25 basis point interest rate hike is almost certain, while investors attach a more than 50% probability to another increase in October.

Rising oil prices are adding to inflation concerns and making rapid monetary easing harder to square with the market backdrop. The 10-year Treasury yield has surpassed 5% for the first time since 2007, while Brent crude has climbed to around $107 a barrel. These moves have unnerved equity investors, providing support for the dollar.