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Current Setup and Live Chart Ahead of Tuesday's Fed nomination vote and the US CPI data for April, the EUR/USD continues to trade within the context of the oil shock risk premium and a proxy for the Fed interest rate pathway. The US CPI data for April, scheduled for release on Tuesday, 11 May, will be a test of whether the inflationary fears that the oil shock risk premium has produced have begun to manifest in consumer prices. This makes the CPI data set of extreme importance, with the potential for extreme market volatility when the numbers hit the newswires. The market has tended to lean towards the US Dollar, principally because it tends to run to the greenback's safe-haven status during risk-off sentiment driven by geopolitical events. However, an additional factor has been the Fed’s hawkish hold of 29 April. Oil price spikes tend to drive inflation, which is why the Fed took a proactive stance to halt further rate cuts. Europe, on the other hand, is a net energy importer and is vulnerable to the oil shock risk premium. A poll of economists has the CPY YoY result coming in at 3.7%, up from the prior 3.3%. The Core CPI MoM consensus is 0.3%, up from the prior 0.2%. If these consumer inflation measures come in higher than expected, we could see a rise in US bond yields, which puts the USD on bid at the expense of the Euro. To some extent, this outcome may already have been priced in. So the real market surprise would be if the numbers come in lower than expected by more than 0.1% deviation. This would cause the USD to lose ground against the Euro, probably with an outsized move. This Monday, the EUR/USD opened the week with a downside gap, which was mostly closed during the session. However, the pair is still trading 0.06% lower. The pair is trading at 1.1777 at the time of writing. EUR/USD Forecasts: Macro Drivers 1.Oil prices: These remain the main driver of the EUR/USD forecasts and price moves. Higher oil prices constitute a growth risk for the Eurozone and puts pressure on the Euro. The surge in energy prices has been directly responsible for the EUR/USD decline, and the pair has stalled at key resistance levels, as investors continue to worry that energy-driven inflation would harm the Eurozone economy. 2.Broader risk-off demand for USD: The US-Iran war is not close to ending. The blockade of oil shipping in the Strait of Hormuz remains a sore point between the two parties. Over the weekend, US President Donald Trump called the Iranian proposals to end the war "unacceptable." This continues to set the stage for a protracted conflict and Eurozone growth risk. 3. Rate volatility: The Fed's hawkish stance in response to the oil risk premium continues to drive US interest rate volatility. The upcoming US CPI data will add to this volatility, which continues to drive two-way price action amid heavy trading in the pair. Price catalysts This Week US CPI: This will either confirm that the inflationary fears from the energy price spikes are well and truly founded, or indicate that seepage into the consumer end of the supply chain is still not materializing. The outcome could be huge for the EUR/USD. Oil direction: Any further spikes will put pressure on the Euro. However, pullbacks in Brent crude prices will relieve this pressure. U.S. yields pathway /USD positioning by traders: This will be a function of the US CPI data this week. Hotter-than-expected CPI data will cause a spike in US bond yields and lead to increased USD positioning, leading to a decline in EUR/USD. Geopolitical headlines: The volatility stemming from market reaction to de-escalatory headlines could be huge for EUR/USD. The market is seeking more good news than bad at this point. EUR/USD Forecast: Weekly Scenarios Base case: The EUR/USD maintains its consolidation, albeit choppy, with a downside skew. This will hold as long as the oil price risk premium remains. However, US consumer inflation data could significantly alter the pair's outlook. Bull case (EUR/USD rises): The following factors will favor an uptick in EUR/USD: cooler-than-expected US CPI data, a retreat in oil prices, a decline in US bond yields, and the fading of the USD safe-haven premium. Bear case (EUR/USD declines): A decline in the EUR/USD could be on the cards if the following occur: hotter-than-expected US CPI data, fresh spike in Brent crude above $110/barrel, higher US bond yields, and new EU growth concerns. EUR/USD: Technical Outlook The bounce from the 1.1673-1.1703 support zone has stalled just below the 1.1813 resistance level (the 24 December 2025 and 27 February 2026 highs). A further advance follows the uncapping of this barrier, with the 9-11 Feb 2026 high at 1.1921 serving as the next target to the north. Fig 1: EUR/USD daily chart showing key price levels (snapshot taken on 11 May 2026) However, a further decline on the pair has to follow a rejection from 1.1813 and a subsequent breakdown of the support zone at 1.1673-1.1703. If this is the case, the 1.1627 support formed by the neckline of the 13 March/3 March double bottom becomes the next downside pivot. Only if this pivot is left undefended by the bulls can we see a further decline towards the 1.1590 (19 January low) and 1.1509 (21 November 2025 and 4 April 2026 lows) support levels.