EUR/USD Under Pressure as Energy Risks and Hawkish Fed Expectations Weigh on Outlook

EUR/USD remains under pressure as energy risks and Fed repricing drive the near-term outlook. The recent bounce came after reports of possible diplomatic outreach from Iran and US assurances to protect energy shipping routes. However, there is still no real de-escalation, and the conflict continues. As long as the energy shock persists and the Strait of Hormuz remains disrupted, the euro stays vulnerable.

Higher energy prices are inflationary and have already pushed markets to price a more hawkish Federal Reserve. Around 45 basis points of rate cuts are expected this year, but that could be reduced if US data remains strong. ADP payroll data came in positive today. A stronger jobs print or high prices paid component would support the dollar and add pressure on EUR/USD.

Technically, the broader trend remains bearish with lower highs and lower lows. Resistance at 1.1670 is the key level to watch. Only a break above that would improve the short-term outlook and open the door toward 1.1700 and 1.1750.

On the downside, the price has already broken below the upward trendline from October last year. Initial support is at 1.1625, followed by 1.1578, the January low. A clear break below 1.1578 would expose 1.1500 and could trigger a deeper move, potentially toward the low 1.10s if the energy shock intensifies.

EUR/USD Daily Chart

In short, unless energy tensions ease and US data weakens, risks for EUR/USD remain tilted to the downside.