EUR/USD: Uncertain sideways movement expected – Rabobank

EUR/USD Faces Ongoing Volatility Amid Energy Price Surge

The FX Strategy team at Rabobank anticipates that the EUR/USD pair will continue to experience significant fluctuations. Rising oil and food costs are fueling inflation worries, which in turn are boosting the US Dollar’s safe haven status. While their main projection is for the currency pair to move within unstable ranges throughout 2026, they caution that their 1–3 month forecast of EUR/USD at 1.16 could be threatened if the Strait of Hormuz remains largely inaccessible.

Euro Remains Vulnerable Due to Energy Market Turmoil

Looking ahead, next week’s schedule includes meetings from eight G10 central banks, notably the Federal Reserve and the European Central Bank, which adds further uncertainty to the EUR/USD outlook. Rabobank maintains its core expectation that the pair will continue to trade within erratic ranges this year as markets react to ongoing developments. Market activity since the beginning of 2026 has reinforced this perspective.

The team highlights that if the Strait of Hormuz stays closed for a prolonged period, there is increased risk that EUR/USD could fall below their 1–3 month projection of 1.16. They plan to reassess their forecasts in the coming weeks. For now, the 200-day simple moving average at 1.1676 is acting as a ceiling for the pair.

Rabobank also notes that the US Dollar’s recent strength, particularly in response to Middle East tensions, confirms its reputation as a safe haven asset. These gains have helped ease concerns that the Dollar was entering a phase of long-term weakness, a fear that has lingered since last spring.

According to their analysis, persistently high oil prices tend to benefit the US Dollar. Conversely, the Euro may face downward pressure due to the Eurozone’s reliance on imported energy.

This week, EUR/USD has dipped to lows near 1.1507. The team would not be surprised to see this level tested again if market uncertainty persists. Should energy prices continue to climb, the pair could revisit last summer’s lows around 1.14, or potentially drop even further.

(This report was generated with AI assistance and reviewed by an editor.)