EUR/USD Tumbles as Energy Prices Soar and US Dollar Stages Comeback

The EUR/USD has dropped 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.

Energy prices have rebounded after remaining steady over the weekend, with crude oil prices adding pressure on the EUR/USD and other FX majors. The East-West pipeline was shut by Saudi Arabia following drone attacks from Iraq, which has left markets vulnerable to another bout of risk aversion.

The technical EUR/USD forecast is bearish, as the pair broke below the lower trendline of its triangle pattern today, taking support around 1.1565 to 1.1580 area. This development suggests that if selling pressure remains or intensifies, the EUR/USD could move towards the 1.1500 handle.

The dollar has started this week on the front foot, with both domestic and external developments now working in its favour. The FOMC rate decision is expected to bring a 25bp Federal Reserve rate hike, which will likely keep the balance of risks in favor of a moderately stronger dollar.