Euro Nears Two-Month Low as ECB Sees Energy Shock Lasting Longer

The euro remained under pressure as investors assessed the European Central Bank's outlook for inflation after a renewed rise in energy costs. EUR/USD traded near $1.1453 on Tuesday, its lowest level since late July. The pair has been affected by a firm US dollar and uncertainty over how European policymakers will respond to higher energy prices. ECB Chief Economist Philip Lane said the current energy shock is likely to last longer than the central bank anticipated earlier in the year. He expects the second wave of price increases to create higher and more persistent inflation before inflation begins moving back toward the ECB's target from mid-2027. The comments complicate the policy outlook. Higher energy costs could argue for tighter monetary policy, but weaker growth caused by expensive energy can make aggressive tightening more difficult. For currency traders, the euro's reaction is also linked to the US rate outlook. Markets are pricing further Federal Reserve tightening, keeping the relative yield advantage tilted toward the dollar. MarketMindFX View: EUR/USD remains focused on the $1.1450 region. Holding below $1.1500 keeps the pair exposed to further downside, while a recovery above $1.1500 would ease immediate selling pressure. Key Levels: EUR/USD Support: 1.1400, 1.1350 EUR/USD Resistance: 1.1500, 1.1550 Source: Reuters, September 22, 2026. MarketMindFX analysis.