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Euro gives up early gains amid higher oil prices, French fiscal risks

October 22, 2026

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Euro surrenders early gains against the US Dollar due to multiple headwinds.
Elevated oil prices and French fiscal risks continue to keep the Euro under pressure.
Both the Fed and the ECB are expected to leave interest rates unchanged next week.

The Euro (EUR) gives back its early gains against the US Dollar (USD) and flattens at around 1.1234 during European trade on Thursday. The major currency pair comes under pressure as the Euro faces multiple headwinds.

Euro sentiment pressured by energy costs and French debt concerns

Strategists at Danske Bank observe that the latest move lower in the Euro has been primarily a sentiment-driven story, stressing that “the decline in the pair is driven by the combination of high energy prices and EUR-pessimism on the back of French debt worries.” They note that these factors have reinforced existing caution toward the single currency, keeping investors wary of adding Euro exposure despite the absence of a clear directional catalyst from broader markets.

Higher oil prices bode poorly for the Euro, given that the continent relies heavily on its imports to meet its energy demands. As of writing, the WTI Oil price trades 2% higher to near $99.50.

Meanwhile, investors await the flash Eurozone-United States (US) PMI data for October, which is scheduled for Friday. In both the Eurozone and the US, overall business activity is expected to have expanded again, but at a moderate pace.

Going forward, key triggers for the Euro and US Dollar will be monetary policy announcements by the European Central Bank (ECB) and the Federal Reserve (Fed) next week, in which both are expected to leave interest rates unchanged.

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1231, holding below the 20-day Exponential Moving Average (EMA) at 1.1266 and keeping a mild bearish bias in place. The pair remains capped by this short-term EMA, suggesting rallies are still being sold, while the Relative Strength Index (RSI) near 40 hints at weak but stabilizing downside momentum rather than outright oversold conditions.

On the topside, the 20-day EMA at 1.1266 is the immediate resistance that bulls need to reclaim to ease the current pressure and open the way for a more sustained recovery. On the downside, the absence of nearby measured supports in the data set leaves spot vulnerable to further slippage toward prior price lows, with sentiment likely to stay fragile while EUR/USD trades beneath the short-term EMA