ING’s Chris Turner highlights that strong support just below 1.1500 in EUR/USD is increasingly at risk as elevated Oil prices hurt Europe’s terms of trade. Despite narrowing US–eurozone rate differentials, he sees only limited upside on any IEA-driven relief rally. ING warns that a break below 1.1475/1.1500 could trigger a quick move toward 1.1400.

Energy shock weighs on Euro outlook

"Big support just below 1.1500 in EUR/USD remains vulnerable. The longer energy prices stay high, the greater the damage to the 2026 narrative of synchronised global growth and Europe playing catch-up with US exceptionalism. Even though US-eurozone rate differentials are narrowing in favour of the euro, the energy-driven terms of trade shock is having a much bigger effect on EUR/USD."

"Back in 2022, the IEA released 62 and then 120 million barrels at the start of March and April, respectively, to address the spike caused by the Russian invasion of Ukraine. The FT is reporting that the US is pushing for a huge 300-400m barrel release, marking a whopping 25-30% of IEA stocks. Such a huge release might bring some temporary calm to energy markets and knock the dollar off its highs."

"We could see a brief bounce in EUR/USD today should the IEA get anywhere near that 300-400m barrel release (though that seems very optimistic), but it looks like position adjustment will mean that EUR/USD struggles to make it much above the 1.1600 area now."

"Below 1.1475/1.1500, expect trade volatility to surge as EUR/USD could make a run at 1.1400 in fast markets."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)