EUR/USD Falls Below Moving Averages as Fed Rate Hike Looms

The EUR/USD currency pair closed at 1.1550 on Monday, down 0.42% from the previous day and below both its moving averages for the first time since late July.

This occurred as futures tied to the Fed's rate hike indicated a quarter-point increase is almost certain by Wednesday, with some predictions putting it at 3.75% to 4.00%.

The European Central Bank (ECB) raised its deposit rate on September 10, citing inflation that will remain above target for an extended period. The ECB's forecast assumed a Brent crude oil price of $88 per barrel this quarter and $78 next year, but it has since traded above $100.

As Europe imports nearly all its crude oil and pays for it in dollars, every $10 increase in the barrel translates to euros sold to buy those dollars. Monday's close was half a cent below the assumed euro price of 1.16 against the dollar through 2028.