- EUR/USD forecasts for the week will continue to be driven by oil shocks and attendant inflationary fears. EUR/USD starts the week lower.
EUR/USD Price Predictions: What is happening in the markets so far?
The EUR/USD is a currency pair that is sensitive to risk. The current risk-off shock being experienced in the financial markets continues to play out, with the EUR/USD currently trading 0.68% lower. The EUR/USD is trading at 1.1539 as of writing.
- Oil prices go up + risk-off environment: EUR/USD down (Euro is a net energy importer has energy import exposure)
- Oil prices stabilize or head lower: EUR/USD stabilizes, but in a two-way choppy trade.
EUR/USD Price Predictions: Macro Drivers for the Week
1. Iran war -> oil shock: the dominant theme
The classical energy shock is playing out in the markets since the Iran war started a little over a week ago. Oil prices surged sharply over the weekend, spiking to $119.50 per barrel on the Brent benchmark. The latest spike has already translated into rising prices of refined fuels worldwide, stoking global inflation concerns.
The Eurozone is a net energy importer, and rising oil prices lead to the Euro selling. The situation has led to a sharp selloff in European stocks and bonds, with yields surging as well amid fears that prolonged inflation driven by higher oil prices will translate into tighter monetary policy. The expectations for the ECB in 2026 werewere for further easing. These expectations now lie in a precarious balance.
2. USD safe-haven demand
The safe-haven demand for the US Dollar has ramped up significantly. The pip gain seen in USD pairs has even outstripped that of the CHF/JPY, according to a Reuters comparison report.
3. ECB Policy
The European Central Bank (ECB) has expressed caution about the situation, with an ECB policymaker indicating that the bank should “sit tight” on monetary policy given the uncertainty about the long-term impact of the oil shock. The Euro could face additional headwinds if markets reprice a higher-inflationary path amid the ECB’s caution.
EUR/USD Forecasts for the Week: What to Watch
Watch the following drivers of price action to get an idea of the EUR/USD’s directional moves.
- Oil price volatility
- Risk sentiment (safe-haven flows)
- ECB reactions and policy statements (with specific responses to the ECB’s reaction to any oil-driven inflation)
- Fed rate expectations (will the Fed delay easing and buck the 2026 easing expectations)
EUR/USD Forecasts for the Week: Technical Outlook
The previous analysis of this pair identified bull and bear case price points. The bear case price level has been breached. The decline in the pair has eroded the lower trendline and the 1.1575 support level. There is currently an attempt at a return move above this price level, which is now acting as resistance. If this is successful, the supply wall at 1.1671 is the next upside target. Above this wall, the next supply wall with 1.1813 as the upper boundary becomes the next target.
On the flip side, rejection at the 1.1575 resistance suggests a further push south, targeting the 1.1474 support level and the former low of 4 November 2025. The next support is the 1 August 2025 low at 1.1392, which comes into play if the bears force a deeper decline.