EUR/USD Hinges on Oil Prices Ahead of ECB Rate Decision
The EUR/USD exchange rate is being closely watched by investors as they await the European Central Bank's (ECB) decision on interest rates. The ECB has been considering a hike, but its September meeting case rests on the path of oil prices.
According to the source, Brent crude peaked at $96.12 in the week ending July 24, 2026, and then fell for two weeks before turning back up to $88.52 by August 14. This has led economists to revise their inflation projections upwards, citing higher energy prices.
A Reuters poll of 69 economists found that 57, or 83%, expect the ECB to raise rates again on September 10, which is in line with expectations from June when about 65% of polled economists predicted a rate hike. Meanwhile, leveraged funds have shifted from being net long to net short over the same period.
The euro area inflation rate rose back up to 2.9% in July, driven by energy prices. This has made EUR/USD a levered bet on oil prices, with investors anticipating the impact of rising energy costs on the economy.