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Currencies Outlook

Rising energy prices and interest rates are making the euro vulnerable

Thursday, 23 July 2026, written by Edward Markus

The US economy is less sensitive to rising energy prices than the European economy, and expectations of rate hikes by the Fed have increased. Yet, despite these supportive factors, the EUR/USD remains remarkably stable. In this FX update, we examine the reasons behind this resilience and explain why we nevertheless expect the EUR/USD to weaken further.

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Previous reports

Trump’s waning popularity means greater uncertainty in the currency markets

Thursday, 09 July 2026

Trump’s popularity has fallen sharply and he will have to pull out all the stops if the Republicans are to retain control of Congress in the mid-term elections in November. This means he does not want a war with Iran and wants to keep oil prices low. Iran is exploiting this by keeping up the pressure to force concessions from the US. This, in turn, makes Trump more unpredictable, and this is likely to continue to influence the currency markets for some time.

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US dollar on the rise

Thursday, 25 June 2026

Tensions in the Middle East have eased considerably of late, causing the price of oil to fall sharply. The European economy is benefiting relatively more from this than the US economy, which is positive for EUR/USD. Recently, however, the dollar has been strengthening and EUR/USD has been falling. This report examines how this is possible and what the outlook is for EUR/USD and other major currencies.

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End of the Strait of Hormuz blockade means greater volatility in currency markets

Thursday, 11 June 2026

Volatility in the currency markets has been low recently. We expect this to change in the coming months should the blockade of the Strait of Hormuz be lifted and investors become more willing to take on positions. However, even if the blockade continues for longer and oil prices rise as a result, we expect to see greater volatility in the currency markets, including in the EUR/USD pair..

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