The EURUSD has had a week full of activity, with many fundamental events causing movements in the pair. The pair began the week badly when the Nord Stream, the largest pipeline delivering Russian gas to Germany, was closed for maintenance.
Countries like France have already started shifting to oil in preparation for a possible cutoff.
These developments weighed heavily on the euro.
US inflation also weighed on the pair as it came in higher than investors had expected. Markets expected a 100-basis point rate hike at the next Fed meeting, which saw the dollar rising.
The European Central Bank is expected to start its rate hike journey with a 25bps, although some investors see a possible 50bps rate hike. This decision will be the focus for EUR/USD investors next week. At the same time, the Eurozone is facing a looming energy crisis that is affecting the region’s vulnerable economies. Even if ECB can tame inflation with rate hikes, the region might go into recession.
The market has already priced in the 25bps rate hike, so it would take a surprise rate hike to cause a EURUSD rally. The weekly EURUSD forecast is bearish as markets do not expect the ECB to hike rates higher than the consensus. It would take a surprise hike to elicit a bullish move in EURUSD.
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