The Euro to Dollar (EUR/USD) exchange rate trades near 1.1494 on Monday morning, holding steady on the day but close to recent lows after a softer trend through late March.
The pair has retreated from levels above 1.16 earlier in the month, with recent price action signalling fading upside momentum.
Pound to Dollar (GBP/USD): 1.32394 (+0%)
Euro to Dollar (EUR/USD): 1.14974 (+0.04%)
Dollar to Japanese Yen (USD/JPY): 159.7565 (-0.29%)
WEEKLY RECAP:
EUR/USD struggled to hold gains last week as rising oil prices and geopolitical tensions underpinned the US Dollar.
A sharp energy-driven inflation shock supported safe-haven demand, lifting the Dollar broadly across currency markets.
At the same time, the Euro weakened against multiple peers, reflecting the Eurozone’s exposure to higher energy costs and slowing growth expectations.
Attempts to stabilise midweek proved limited, with rallies capped ahead of the mid-1.16 level.
By the end of the week, EUR/USD had slipped back toward the 1.15 handle, with downside pressure persisting.
Morgan Stanley warns that a sustained energy shock could push EUR/USD toward the 1.13 area, highlighting risks tied to Europe’s deteriorating terms of trade.
Meanwhile, broader market consensus suggests the European Central Bank is likely to remain cautious, even as inflation risks rise, limiting support for the Euro.
The US Dollar, in contrast, continues to benefit from defensive positioning and resilient economic expectations, keeping it supported across major pairs.
This broader trend is also reflected in USD/JPY holding firm and GBP/USD struggling to extend gains.
Near-Term EUR/USD Forecast: Inflation Data and Payrolls in Focus
Attention now turns to key economic releases for both the EUR and USD.
For the Euro, the focus will be on the Eurozone’s flash inflation estimate, with markets watching for signs that higher energy costs are feeding through into prices.
Stronger inflation could reinforce expectations of tighter policy and offer limited support to the single currency.
For the US Dollar, attention will centre on ISM activity data and Friday’s non-farm payrolls report, typically the most market-moving release of the week.
A resilient US labour market could reinforce Dollar strength, while weaker data may allow EUR/USD to stabilise.
Overall, the near-term bias remains tilted lower, with the Dollar supported by risk aversion and the Euro facing structural headwinds.
