EUR/USD Slides as Dollar Surges to 3-Month High on Energy Crisis Fears

EUR/USD has come under significant selling pressure as the US dollar rallied to a three-month peak, driven by escalating Middle East tensions and surging energy prices that are disproportionately impacting the European economy. Oil and natural gas prices have spiked sharply higher amid fears of supply disruption, effectively acting as a direct tax on energy-dependent European economies, with the added burden that energy imports are priced in dollars. The resulting risk-off sentiment has channeled safe-haven flows into the greenback, compounding EUR weakness as investors reassess the Eurozone's growth outlook under the weight of an energy shock. Higher energy costs could complicate the ECB's policy path by simultaneously dampening growth while adding inflationary pressure. The dollar index has strengthened broadly, with the euro bearing the brunt of the move given Europe's acute vulnerability to energy supply disruptions. Traders should watch for any further geopolitical escalation as a catalyst for additional EUR/USD downside, with key support levels under threat if the energy rally persists.