As oil is traded in dollars, demand for the U.S. currency is increasing, market participants explain. The dollar is also attracting demand as a safe-haven currency. The United States is a net exporter of oil, which means the world’s largest economy is not as severely affected by oil shortages as other countries such as Japan or Germany.

Increased risk aversion is keeping the euro under pressure against the dollar and, from a technical perspective, there is still no clear indication of a reversal, according to a market report by Helaba.

The downward movement has not ended yet, especially since the most recent impulsive price low has already been breached. Analysts see further support at the November lows of $1.1469 and then at the significant low from August 2025 at $1.1393.

The euro is weakening despite the fact that foreign exchange markets now expect two interest rate hikes from the European Central Bank this year. This marks a dramatic reversal from last month’s forecasts, which suggested there would be no changes to the ECB’s monetary policy.

This shift highlights how fears over energy-driven economic growth are overshadowing the support that higher interest rates could provide to the common currency.

The head of the Ifo Institute in Munich, Clemens Fuest, also expects the ECB to raise interest rates soon. The ECB reacted too slowly in previous decisions and does not want to repeat that mistake, Fuest said in remarks to a news agency.

Source: naftemporiki.gr