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EUR/USD rebounds as oil surge boosts ECB hawkish repricing

Markets have lifted odds of an ECB rate hike for September to roughly 70% as Brent pushed above $100 after renewed Middle East tensions, according to Action Forex.

Reported · Written up by our desk · Major Pairs

EUR/USD rebounded over the past 24 hours as the euro strengthened broadly, not just versus the US dollar, signaling currency markets are repricing the European Central Bank rather than only reflecting dollar weakness, Action Forex reports.

Action Forex links the move to a rebound in oil prices since mid-week, noting that the renewed shift pushes expectations toward an ECB hawkish scenario. It says September ECB hike odds have risen to roughly 70%.

The outlet points to the ECB’s March staff projections, where the baseline assumed Brent around $90 and European natural gas near €57 per megawatt hour through 2026, while an adverse scenario used oil near $120 and gas around €102, both tied to materially higher inflation.

Action Forex also cites comments from ECB President Christine Lagarde at the July 23 press conference, where she referred to the earlier US-Iran ceasefire as short-lived and said there were serious developments for commodity markets, adding that the ECB expects inflation to stay above target into the first half of 2027. The piece argues that higher energy costs shift the inflation “starting point,” potentially lowering the burden for the ECB to justify another rate hike even before broader wage and services inflation effects fully show up.

Latest closeBrent $90.40 ▲7.5%|Nat gas $2.723 ▲2.3%|EUR/USD 1.147 ▲0.9%

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