|

EUR/USD Price Forecast: War and Oil continue to support the US Dollar

EUR/USD Current price: 1.1581

  • Financial markets continue to gyrate around war and oil headlines.
  • The US Consumer Price Index came in as expected at 2.4% YoY in February.
  • EUR/USD grinds lower, risks piercing the 1.1500 mark on risk aversion.

The EUR/USD pair traded with a soft tone throughout the first half of the day, holding within familiar levels. The Middle East war continues, with back-and-forth attacks and the US Dollar (USD) benefiting from persistent uncertainty.

On the war front, news revolve around Oil emergency reserves and whether they would be released and when. On Tuesday, the International Energy Agency (IEA) proposed the release of 300-400 billion barrels, although the G7 had not decided on it yet. Nevertheless, Japanese Prime Minister Sanae Takaichi said the country will start releasing part of its oil reserves as early as next week to curb gasoline prices to an average of 170 yen per litre. Oil prices barely remain contained, with West Texas intermediate (WTI) hovering around $85.

Meanwhile, European authorities expressed their concerns about the war's impact on the Old Continent. EU Commission President Ursula von der Leyen reports that Europe's reliance on fossil fuels has resulted in an additional €3 billion in costs within the first ten days of the  Iran war.  Also, European Central Bank (ECB) officials started acknowledging interest rates could go higher as a consequence of the Iran war.

The USD retained its strength after the release of the United States (US) Consumer Price Index (CPI). February inflation came in pretty much as expected, according to the CPI report. Inflation remained unchanged at 2.4% on a yearly basis, while the monthly CPI rose 0.3% following the 0.2% increase recorded in January. The core annual CPI was confirmed at 2.5%, matching expectations and the January reading.

EUR/USD short-term technical outlook

Chart Analysis EUR/USD

According to the 4-hour chart, EURUSD is mildly bearish as the pair holds below the 20-period Simple Moving Average (SMA) near 1.1601 and far beneath the declining 100- and 200-period SMAs clustered above 1.17, keeping the broader trend under downside pressure. The Momentum indicator turned lower, slipping back toward the zero line after a brief positive stretch, while the Relative Strength Index (RSI) retreats from the 50 area toward the mid-40s, indicating fading recovery attempts rather than fresh buying interest.

Immediate resistance emerges at the 20-period SMA around 1.1600, with a break higher exposing 1.1630 and then the 1.1660 area, where prior highs align with the descending medium-term averages to form a stronger cap. On the downside, first support stands at 1.1560, ahead of 1.1530 as the next bearish objective if sellers extend control. A sustained move below the latter would open the way toward the 1.1470 region, a long-term static support area.

In the daily chart, EUR/USD is also biased lower as spot holds well below the 20-day and 100-day Simple Moving Averages (SMAs), which cap recovery attempts around 1.17, while price also trades below the slowly rising 200-day SMA near 1.17. The 14-day Relative RSI hovers in the low-30s, reinforcing prevailing selling pressure without yet signaling an extreme oversold condition. Finally, the Momentum indicator remains below its midline and drifting lower, indicating that downside forces still dominate EUR/USD.

(The technical analysis of this story was written with the help of an AI tool.)

Author

Valeria Bednarik

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

More from Valeria Bednarik
Share:

Editor's Picks

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Week ahead: Central bank and earnings bonanza could roil markets

After joining the rate-hike club in September, the Federal Reserve looks set to stand pat in October, waiting to assess more data before deciding to hike again. Whilst this isn’t an unusual move for a central bank, it somewhat contradicts Fed Chair Kevin Warsh’s new mantra of data dependency and zero forward guidance.

CFTC Report: WTI rally runs ahead of positioning
The week in one sentence: WTI prices surged while speculative longs were cut in the week to October 20, creating the clearest price/positioning divergence. Sterling and the Canadian Dollar led the constructive currency shift, while Yen longs also rebuilt. Speculators turned less constructive on the WTI, reducing their net exposure to around 89.3K contracts.
What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.