EUR/USD Crashes as Energy Prices Soar Ahead of FOMC Rate Decision

The EUR/USD has taken a hit due to rising energy prices and a rebounding US dollar ahead of the FOMC rate decision, where a hike is all but priced in now.

Rising oil prices are adding pressure on economies that import energy, including the eurozone. The combination leaves markets vulnerable to another bout of risk aversion, with equities already struggling and renewed calls from technology figures to slow AI development adding to concerns around stretched valuations.

The technical EUR/USD forecast has also turned bearish, as the pair broke below its lower trendline triangle pattern yesterday. This break below support around 1.1565-80 could see a move towards 1.1500, with 1.1405 becoming the next potential area of support.

The euro does have one source of support: the ECB's increasingly hawkish tone. Last week's messaging suggested that policymakers remain open to further tightening, but I remain skeptical that the ECB will actually deliver further rate increases.