ABN AMRO analysts note EUR/USD has been volatile within a range, driven by shifting expectations on reopening the Strait of Hormuz. They expect elevated Oil prices to persist, weighing on EUR/USD in coming months as the Eurozone relies on energy imports, with a possible move towards 1.14 near term. Later, lower energy prices and a relatively more hawkish European Central Bank (ECB) should lift EUR/USD towards 1.20 by end-2026.

Energy shock and policy divergence

"EUR/USD has moved volatile within a range depending on optimism about reaching an agreement to reopen the Strait of Hormuz."

"Even if a deal is reached, we think will take time for the supply to normalise."

"Therefore, we think oil prices will remain elevated."

"It is likely that this will weigh on EUR/USD in the coming months as the euro is dependent on energy imports."

"So, in the near-term EUR/USD could move towards 1.14."

"Later in the year we expect lower energy prices."

"This and a more hawkish ECB compared to the Fed should support EUR/USD higher."

"We still expect the EUR/USD rate to be 1.20 by the end of 2026."

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