EUR/USD Forecast: Oil Prices, US Inflation Data, and ECB Decision in Focus
Risk appetite remained subdued on Wednesday due to concerns over oil prices and the Middle East conflict. The dollar was slightly firmer against most major currencies, while the EUR/USD pair will be closely watched as it is particularly exposed to rising energy costs.
A sustained move in Brent above $100 a barrel could become an increasingly important driver of the currency, especially if higher oil prices begin to feed into inflation expectations. The eurozone's reliance on imported energy also makes it vulnerable to a renewed rise in energy prices.
The ECB's decision on Thursday will be closely followed by markets, as it comes between two key US inflation releases. The ECB's decision may validate or challenge market expectations of a more hawkish monetary policy stance.