EUR/USD Tumbles Amid Energy Price Shock and Hawkish Rate Expectations
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. The near-term EUR/USD forecast remains tilted moderately lower due to hawkish repricing in US rates and oil prices hurting economies of energy importers.
Technical analysis also shows that the EUR/USD has broken below its triangle pattern's lower trendline, with support around 1.1565-1.1580. This bearish development makes fundamental sense given the elevated oil prices.
The eurozone economy's surprising resilience and inflation may have policymakers open to further tightening, but a rate hike is not expected. The dollar has started this week on the front foot, with developments working in its favor, including last week's hotter-than-expected CPI report and rising energy prices.