Rising energy costs are set to weigh on the euro. Subsequently, the EUR/USD could fall towards the 1.11 level, economists at Danske bank report.

Higher energy prices to hit the euro

“At present, it seems unlikely to talk about de-escalation and further downside to EUR/USD is probably realistic at the present stage in the conflict (as energy costs potentially spike further, spot can drop towards 1.11) – assuming next up we see pictures of war and politicians need to step up.”

“Downside in EUR/USD is equally amplified by many turning EUR-positive after the recent ECB meeting.”

“We continue to forecast 1.08 in 12M.”