When Forex exchange rates depend on a single factor, oil prices, it is not difficult to understand the reasons for the EURUSD roller coaster. The main currency pair collapsed to its lowest levels since November, and then recorded its best daily rally since January against the backdrop of Brent’s rise, followed by a move into bear market territory in one morning. We are talking about a 20% collapse of the North Sea variety from four-year highs.
Donald Trump is clearly unhappy with what is happening in the Middle East. Rising oil and gasoline prices are hitting voters and the Republican’s political ratings. The US president is surprised by Iran’s resistance and prefers to wishful thinking. They say the military operation is ahead of schedule and will end soon. Not exactly this week, but soon. Before his speech, the betting markets gave out an almost 50% chance that it would be completed only by May.
The fall of Brent was facilitated by information that several tankers managed to pass through the Strait of Hormuz, and Donald Trump threatens Iran with new strikes only if it continues to block the main oil artery of the planet. In addition, the United States has allowed the purchase of Russian barrels, and there are rumors on the market that the Big Seven are discussing the sale of black gold from strategic reserves.
In fact, there is a lot of oil in the world, you just need to get it moving in order to bring down Brent quotes. Without the opening of the Strait of Hormuz, the North Sea grade may reach $ 150 per barrel, and then decline and stabilize near $ 130. This forecast is provided by Capital Economic.
Unsurprisingly, the annual risks of a reversal in the euro have dropped to their lowest levels since Friedrich Merz pleased Europe with fiscal stimulus. The futures market was seriously considering breaking the uptrend.
Donald Trump’s speech about the imminent end of the conflict in the Middle East changed a lot, but did not convince investors. It is obvious that the US president is looking for a way out of the current situation, but he is unlikely to end the confrontation with Iran without satisfactory results for himself. Especially when the United States has a military advantage. In addition, the increased hypervolatilities of Brent and EURUSD indicate that nothing is finished yet.
