Post #16015

EUR/USD Stabilizes at 1.16 as Oil Pullback Eases Inflation Fears EUR/USD is stabilizing around the 1.16 handle, holding firm as risk sentiment improves slightly. Price is in a consolidation phase here—waiting on the next catalyst to break out of this range. The euro is catching a bid on de-escalation hopes in the Middle East, as talk of a potential ceasefire and U.S. peace proposals cools immediate risk. That’s taken some pressure off energy markets, with oil slipping back below $100, easing inflation concerns. But the backdrop isn’t clean. Iran is pushing back on negotiations, so this “relief” could be fragile. On the policy side, the ECB remains flexible. Christine Lagarde made it clear they’re ready to act at any meeting if energy-driven inflation spills over. Still, with oil pulling back, markets have dialed down rate expectations—now pricing ~2 hikes instead of 3 by year-end. That shift in rate expectations is capping upside for EUR, even as short-term sentiment improves. - Alan