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Euro rebounds as dollar falters amid rate-hike odds

FOMC minutes were seen as moderately hawkish, lifting expectations for 2026, but the US dollar still slipped as investors bet on de-escalation in the Middle East.

Reported · Written up by our desk · Major Pairs

Action Forex said the US dollar failed to capitalize on Brent crude rising to two-week highs and on renewed attention to the Fed’s inflation concerns, leaving EURUSD supported even as investors adjusted rate expectations after the June FOMC minutes.

The outlet pointed to officials’ concern that PCE has stayed above the 2% target for too long and their worries about how tariffs and an oil shock could feed into inflation, along with the pace of investment in artificial intelligence technologies.

According to Action Forex, markets interpreted the FOMC minutes as moderately hawkish, pushing the probability of a 2026 rate hike to 84%, with the likelihood of two hikes at 45%, but the dollar did not benefit, and even higher demand for hedging tied to EURUSD risk did not reverse that move.

Action Forex also linked the euro’s recovery to confidence in a faster Middle East de-escalation, noting that oil price pressure eased after reports on Strait of Hormuz traffic stayed near recent averages, with 36 tankers passing on July 6 and 41 on July 7, versus about 40 per day recently. The outlet added that higher oil costs could still weigh on the eurozone economy, and it cited the IMF lowering its 2026 GDP forecast for the bloc to 0.9% from 1.1%.

Latest closeWTI crude $81.23 ▼1.7%|Brent $85.92 ▼2.8%

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