Euro to Dollar Forecast: EUR/USD Struggles as Energy Prices Surge

Modified: Tuesday, 7 April 2026 08:01 BST - Written by Ben Hughes

STORY LINK Euro to Dollar Forecast: EUR/USD Struggles as Energy Prices Surge

The Euro to Dollar exchange rate (EUR/USD) struggled to hold above 1.16, as rising energy prices and geopolitical tensions continued to weigh on the Euro.

With oil markets driving short-term direction and concerns over weaker terms of trade intensifying, EUR/USD faces downside risks before a potential recovery later in the year.

EUR/USD Forecasts: It's all about energy

MUFG sees the risk of renewed Euro to Dollar (EUR/USD) exchange rate losses to around 1.10 in the short term, but is backing gains to 1.20 at the end of 2026.

Danske Bank is still projecting short-term EUR/USD losses to 1.12 as the Euro is hit by the weaker terms of trade amid the jump in energy prices.

Scotiabank expects EUR/USD gains to 1.22 at the end of 2026.

EUR/USD secured a marginal gain during the week, but was unable to hold above the 1.16 level as energy prices jumped again.

The Iran conflict will continue to be a key element in the short term, especially given the impact on energy prices and the global economy.

MUFG commented; “ultimately we see de-escalation of the Middle East conflict over the coming months so that sees EUR/USD start to recover from lower levels.”

It added; “The US could de-escalate in two-to-three weeks, as has now been indicated by President Trump but whether Iran then decides to reopen the Strait of Hormuz will be key to a reversal away from the severe scenario that incorporates the higher crude oil price range.”

The bank also noted the risk of more adverse developments; “In a severe scenario, the conflict drags on and attacks on energy production infrastructure increase in scale which extends the timeline of supply disruption. Brent crude oil could then trade in a higher range of USD 120-160p/bl that results in increased risks of global recession.

The US recorded stronger than expected jobs data for March with an increase in non-farm payrolls of 178,000 compared with consensus forecasts of around 65,000.

Federal Reserve policy will tend to reassert its influence over the medium term.

Danske Bank commented; “We expect the Fed to resume rate cuts already from September, well ahead of current market pricing.”

The bank added; “Financial conditions have tightened significantly even without policy rate hikes, which weighs further on the growth outlook in the US and globally. We expect the Fed to resume rate cuts already from September, well ahead of current market pricing. We still like to position for a tactically lower EUR/USD, but the structural arguments for another round of USD weakness are rising on the horizon.”

Scotiabank notes barriers to dollar gains; “Longer-term structural USD headwinds remain significant and more evidence of weaker US labour market trends may force a re-repricing of Fed rate cut expectations. In the shorter-term, dollar seasonality is about to tilt negative as April gets underway.”

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TAGS: Euro Dollar Forecasts