EUR/USD Analysis: Euro Eyes 1.12 as Oil Decides the ECB’s Hike
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Key Points:
- Brent peaked at $96.12 in the week ending 24 July 2026. It fell two weeks running to $87.86 by 7 August, then turned back to $88.52 on the 14th. The ECB's September case rests on that series, and nobody can project it.
- The Governing Council raised rates on 11 June, staff revising the inflation projection up "owing to a higher path for energy prices."
- 57 of 69 economists in Reuters' 10-13 August poll want the repeat on 10 September. That's 83% of them, against about 65% in June.
- Leveraged funds have gone from net long to net short over the same run of months. Slow money has spent the year selling.
Euro area inflation ran back up to 2.9% in July, and energy did all of it. Below I’ll lay out why that turns EUR/USD into a levered bet on one commodity. Then why the September hike almost everybody expects is the thing that hurts the euro. Then why both ways the Strait of Hormuz can break, the euro ends up in the same place.