The EUR/USD exchange rate maintained its significant downward trajectory this week. The asset experienced a decline over three consecutive days, hitting a low of 1.1545, a decrease from the year-to-date peak of 1.2080. The EUR/USD pair has experienced downward pressure recently, declining from a peak of 1.2080 to its current level of 1.1545. This retreat occurred in the context of ongoing concerns regarding the European economy, particularly in light of increasing energy prices. Data indicates that Brent and West Texas Intermediate experienced a rise to $97 and $93, respectively, despite the IEA’s decision to release millions of barrels of oil.
The member states are set to release more than 400 million barrels, with the United States contributing over 172 million barrels to this total. Oil prices continued to increase as investors expected that the release will not compensate for the loss at the Strait of Hormuz. Additionally, it surged following Iraq’s announcement, a leading oil exporter, that it would halt port operations at its oil terminals after two tankers were attacked. Europe faces heightened vulnerability to the current crisis in the Middle East due to its constrained natural resource availability. Energy imports from Russia have been restricted following the onset of the conflict in Ukraine.
Experts anticipate that the current rise in energy prices will drive European inflation above 3% in the near future, as Iran perceives it has leverage. In a statement on Wednesday, the nation reaffirmed its objective to drive oil prices up to $200 in the near term. The EUR/USD pair is expected to respond moderately to the forthcoming US jobless claims data scheduled for release on Thursday, along with the personal consumption expenditure report. The PCE report holds significance; however, its influence will be constrained as inflation in the US is expected to persist in its upward trajectory in the short term.
The daily timeframe chart indicates that the EUR/USD pair has experienced a significant decline over the past few months, dropping from a peak of 1.2081 in January to its current level of 1.1552. The asset has fallen beneath the ascending trendline that links the lowest swings since July of the previous year. The pair has fallen beneath the 50-day Exponential Moving Average, and the Supertrend indicator continues to show a bearish signal. The Relative Strength Index and the MACD are on a downward trajectory. Consequently, it is probable that the pair will persist in its downward trajectory as sellers aim for the next significant level at 1.1450.