- The EUR/USD forecasts for the week will be shaped by the war headlines and the interest rate decisions of the Fed and ECB.
The EUR/USD is attempting to stabilize after last week’s risk-off bid for the US Dollar. The greenback opened the week on a softer note, allowing the pair to push higher towards 1.1524. The 1-hour chart reveals that the upside move came off the back of the intraday double bottom, allowing for a push to the north.
Two opposing forces are driving the pair’s limited movement, ahead of Wednesday’s interest rate decision.
- Safe-haven demand for the US Dollar is directly tied to the ongoing war in Iran and the disruption at the Strait of Hormuz.
- On the European side, rate repricing risks have emerged as oil prices remain above $100. The rise in oil prices has revived inflation fears, forcing a reassessment of the prior expectation of gradual ECB easing.
In other words, the EUR/USD is in a two-way tussle: EUR repricing vs USD safe-haven bid.
Monday’s price action saw last week’s dollar advance pause, leading to a Euro rebound as markets repositioned ahead of a week filled with central bank decisions. The current mood is now factoring into these decisions, with EUR/USD now traded as a “headline risk + rates week” pairing.
EUR/USD Forecasts: Primary Catalysts
1. Central Bank Decisions
It is rare for the Fed, ECB, BoJ, and BoE to release interest rate decisions in the same week. Apart from the BoJ, which entered 2026 with markets tightening, the other three central banks had easing expectations. The oil shock from the Iran war is now causing these expectations to be repriced higher due to fears of oil-price-induced inflation. The Fed is the first to release its interest rate decision. Any tilt towards less easing favours the US Dollar, while an ECB tilt towards vigilance over inflation is Euro-supportive. The sway of the currency pair will depend on which central bank is viewed as being less dovish than the other.
2. Oil prices > $100
Oil prices staying above $100 will lead to markets trimming Fed cut expectations because of inflationary fears, but this will also lift ECB hike expectations towards
3. War headlines, especially around the proposed Hormuz coalition
US President Trump called for a coalition to shatter the current Hormuz blockade. Answers from key players have been negative, heightening concerns about the blockade. If shipping conditions improve, this will reduce USD demand and promote a risk-on sentiment. Otherwise, failure to lift the blockade maintains the status quo.
EUR/USD Forecasts Weekly Scenarios
Base case: the currency pair ranges in a two-way directional whipsaw, oscillating between 1.1443 and 1.1552. Consolidation is a normal response when markets are waiting for clarity from the headlines already identified.
Bull case: EUR/USD is expected to trade higher if the risk premia stabilize. This will cause USD demand to fade. The pair will also get a boost from the ECB’s continued focus on inflationary risks, even as US yields ease.
Bear case: EUR/USD will trade lower if new triggers spark renewed USD safe-haven interest and higher US yields. If the Fed also makes a case for “higher for longer” rates, or EU growth fears emerge (due to higher oil prices stoking inflation and tighter credit conditions), this will also promote the bear case.
EUR/USD Forecasts: Technical Outlook
The double bottom at 1.1414 promoted the latest upside push, which cleared the 1.1474 resistance and led to a further northside push that now challenges the 1.1526 resistance. If the bulls are clear of the 1.1525 barrier, the next target will be the 1.15756 resistance.
However, a failed clearance of 1.1525 could lead to a pullback that aims for the 1.1474 support in the first instance (intraday low), with the 1.1414 support (double bottom level) forming an additional pivot.