Euro to Dollar Forecast: EUR/USD Pressured as Energy Crisis Deepens

Modified: Monday, 30 March 2026 09:01 BST - Written by David Woodsmith

STORY LINK Euro to Dollar Forecast: EUR/USD Pressured as Energy Crisis Deepens

The Euro to Dollar exchange rate (EUR/USD) slipped back toward 1.15 as rising energy prices and geopolitical tensions continued to favour the US dollar.

With oil markets driving short-term direction and central banks navigating inflation risks, the Euro remains vulnerable to further downside before a potential recovery later in the year.

EUR/USD Forecasts: Energy crisis

MUFG is continuing to forecast a short-term Euro to Dollar (EUR/USD) exchange rate decline to 1.13amid the jump in energy prices before a reversal later in the year.

Bank of America also sees the risk of near-term EUR/USD losses, but is still backing gains to 1.20 at the end of this year as the dollar loses ground.

EUR/USD was unable to hold initial gains and retreated to near 1.15 as Brent moved higher again. Energy prices will remain a key short-term influence with the Euro generally vulnerable when costs increase.

MUFG commented; “The unprecedented loss of global supply remains a catalyst for a sharper rise in energy prices if the bottleneck is not resolved. The longer the conflict persists, the greater the likely drag on global growth due to worsening demand destruction. Risks have increased for a more prolonged energy supply disruption after attacks on energy sites.”

There will inevitably be important economic implications. Markets are now expecting ECB rate hikes to combat inflation with investment banks seeing a potential April move.

MUFG is not convinced that elevated expectations will underpin the currency; “The ECB sounded more hawkish than the Fed last week, but we doubt this will provide much support for the EUR while the energy price shock continues to intensify.”

According to Nomura, the Euro will be more resilient than in 2022; “Part of the reason behind the under-performance of EUR was the terms of trade but an equal part was the ECB's delay in hiking rates at a time when the Fed was tightening aggressively.”

At this stage, markets are pricing in just over a 30% chance of a rate hike this year.

There were no major data releases during the week but, during the week ahead, the US will release the monthly important report after the 92,000 drop in payrolls for February..

ING commented; “We look for a rebound to around 60,000 positive, but the underlying trend remains very weak. Given the Fed has a dual mandate of price stability and maximum employment, this is another argument for the Fed to look through what we believe will be a short-term energy-driven price shock.

BoA sees near-term risks of dollar gains; “The USD rally so far has of course priced this into a degree, but upside risks remain if the Middle East conflict drags on.”

BoA added; “We retain a bearish USD outlook for year-end (EUR/USD at 1.20), conditioned upon no Fed hikes, energy supply normalization and rest of the world growth convergence.”

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TAGS: Euro Dollar Forecasts