US Dollar Surges As Middle East Tensions Spur Oil Prices. Forecast as of 20.06.2025
The United States is a net exporter of energy commodities. Rising oil prices are beneficial to the US dollar, and Donald Trump's decision not to strike Iran for two weeks has led to a de-escalation of the conflict. Let's discuss these topics and make a trading plan for the EURUSD pair.
Major Takeaways
The US dollar is benefiting from soaring Brent prices, as it is the currency of an exporting country.
European central banks are cutting rates across the board.
De-escalation of the conflict in the Middle East is helping the euro.
Long trades can be opened if the EURUSD pair breaks above 1.153.
The US dollar is benefiting from soaring Brent prices, as it is the currency of an exporting country.
European central banks are cutting rates across the board.
De-escalation of the conflict in the Middle East is helping the euro.
Long trades can be opened if the EURUSD pair breaks above 1.153.
Weekly US Dollar Fundamental Forecast
Donald Trump has gained notoriety for employing tactics of negotiations at gunpoint. This is not merely a matter of trade wars, where the US administration initially imposes excessively high tariffs and subsequently reduces them in exchange for concessions. The strategy is being transferred to geopolitics. The US president has stated that he will make a decision regarding potential strikes against Iran within the next two weeks. He granted Tehran an opportunity to resume negotiations regarding its nuclear program, prompting Brent to retreat and boosting the EURUSD pair.
Donald Trump has gained notoriety for employing tactics of negotiations at gunpoint. This is not merely a matter of trade wars, where the US administration initially imposes excessively high tariffs and subsequently reduces them in exchange for concessions. The strategy is being transferred to geopolitics. The US president has stated that he will make a decision regarding potential strikes against Iran within the next two weeks. He granted Tehran an opportunity to resume negotiations regarding its nuclear program, prompting Brent to retreat and boosting the EURUSD pair.
Generally, trade wars tend to spur inflation in countries that impose tariffs. Meanwhile, a slowdown in GDP growth is common for countries against which import duties are imposed. In the case of oil, however, the situation is entirely different. The Brent rally is driving inflation worldwide. As a result, the economies of net exporters are experiencing an acceleration, while those of net importers are exhibiting a deceleration. The United States is a net supplier of energy commodities, and the ongoing conflict in the Middle East is creating tailwinds for the US dollar and headwinds for the euro.
Central Banks' Interest Rates
Source: Bloomberg.
Source: Bloomberg.
Therefore, the EU economies are facing dual challenges in the form of trade wars and escalating geopolitical tensions. Their central banks are attempting to provide support through lower interest rates. Sweden, Switzerland, and Norway have followed the ECB in adopting this approach.
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