EUR/USD Near 1.15 As Oil Prices Boost USD

The Euro to Dollar (EUR/USD) exchange rate trades near 1.1504 on Monday, ticking slightly higher on the day but holding close to recent lows.

The pair has eased back from above 1.16 earlier in March, with recent price action showing fading upside momentum and a gradual drift lower.

WEEKLY RECAP:

EUR/USD struggled to sustain gains last week as rising oil prices and geopolitical tensions underpinned the US Dollar.

Safe-haven demand strengthened, with markets turning more defensive amid concerns over inflation and global growth.

The Euro remained under pressure, reflecting the Eurozone’s exposure to higher energy costs and weaker activity indicators.

Attempts to recover midweek proved short-lived, with rallies capped ahead of the mid-1.16 level.

By the end of the week, EUR/USD had slipped back toward 1.15, with the US Dollar retaining the upper hand.

ING notes that “upside risks for the dollar” could pull EUR/USD back toward the 1.150 area in the near term.

The bank also cautions that it is “too early to expect a sustained sell-off in the dollar”, suggesting underlying support remains intact.

Meanwhile, Morgan Stanley highlights that rising energy prices risk keeping inflation elevated, complicating the outlook for Europe and limiting the Euro’s recovery.

Overall, the pair remains pressured, with markets favouring the Dollar during periods of uncertainty.

Near-Term EUR/USD Forecast: Inflation and Payrolls in Focus

Attention now turns to a heavy economic calendar for both EUR and USD.

The Eurozone’s flash inflation estimate for March is due early in the week, a key release that will shape expectations for European Central Bank policy.

A stronger reading could reinforce expectations of tighter policy and offer the Euro some support.

In the US, focus will shift to ISM activity data and Friday’s non-farm payrolls report, typically the most influential release of the week.

A resilient US labour market could reinforce Dollar strength, while softer data may allow EUR/USD to stabilise.

For now, the EURUSD bias remains to the downside, with markets cautious and the Dollar supported by risk aversion.