EUR/USD Weighed Down by Rate Uncertainty and Energy Costs

The EUR/USD exchange rate is facing mounting headwinds due to uncertainty over the European Central Bank's willingness to raise interest rates, particularly in comparison to the Federal Reserve's more hawkish stance at its September meeting.

HSBC notes that Europe's greater exposure to elevated energy costs could weigh on growth and the external balance of the region. Despite stronger PMI readings in some areas, other economic data in September has generally disappointed, posing challenges for the EUR/USD performance.