ABN AMRO analysts have flagged elevated oil prices as a key headwind for the euro against the US dollar, with EUR/USD remaining volatile and range-bound as markets assess shifting expectations around the reopening of the Strait of Hormuz โ a critical chokepoint for global oil supply.
The Strait of Hormuz handles roughly 20% of the world’s seaborne oil traffic. Any disruption or anticipated closure pushes crude prices higher, which tends to favour oil-exporting economies and their currencies while pressuring energy importers, including the eurozone.
ABN AMRO’s view is that these oil-driven headwinds will continue to weigh on EUR/USD in the near term, with a meaningful rebound in the pair not expected until late 2026.
Why Australian Traders Should Care
While EUR/USD is not a primary pair for most Australian retail traders, the oil dynamic at play has direct read-throughs to AUD/USD. Australia is a net commodity exporter, and sustained higher oil prices can support broader risk-on flows into commodity-linked currencies including the Australian dollar โ though the AUD is more directly sensitive to iron ore and China demand than crude.
For traders holding AUD/USD positions, a stronger US dollar environment โ which typically accompanies euro weakness โ creates headwinds for the Aussie as well. EUR/USD and AUD/USD tend to move in the same direction against the greenback, so sustained euro softness is worth monitoring as an indirect signal.
What to Watch
The key variable here is the Strait of Hormuz situation. Any confirmed diplomatic progress that eases supply concerns could push oil lower, reducing the drag on EUR/USD and potentially lifting sentiment across commodity currencies including AUD. Conversely, further escalation keeps upward pressure on oil and USD strength in play.
Australian traders should monitor Brent crude levels alongside AUD/USD for signs of correlated moves, and keep an eye on whether ABN AMRO’s late-2026 EUR/USD rebound timeline shifts if the geopolitical picture changes materially.
Directional bias: Wait-and-see. Insufficient data in the source to confirm specific EUR/USD price levels or a defined trading range, making a firm directional call premature.
Source: FX Street