Euro Rebound Fades Amid Ongoing Geopolitical Tensions and High Gas Prices

The Euro rebounded above $1.140 against the US Dollar as oil prices dropped sharply today, but analysts at ING remain cautious about the currency's future prospects.

Francesco Pesole from ING notes that while the move looks optimistic, there is no clear de-escalation in geopolitical tensions, and renewed military strikes could quickly send Brent back to $100/bbl and EUR/USD below $1.1380.

Gas prices are another reason for caution on EUR/USD, with TTF trading at €58/MWh, more than 30% above levels at the start of July and close to the March highs.

Pesole stresses that elevated European gas prices are hurting the Euro's terms of trade, which are hovering near March lows and comparable to 2023 levels due to their importance in eurozone energy imports.