# Analysts See Euro Sliding Toward 1.150 as Fed Rate-Hike Bets Build

> ING expects EUR/USD to slide toward the 1.150 level in the coming weeks as Fed rate-hike bets, rising energy prices and a possible dovish ECB outweigh an upward revision to eurozone growth.

**Type:** article · **Category:** Market · **Published:** 2026-09-08 · **Source:** TrendKia
**Canonical:** https://trendkia.com/en/market/fed-ki-dara-barhotari-ki-ummidon-ke-bicha-yuro-men-1-150-taka-phisalane-ka-anumana-29573 · **Language:** English
**Tags:** EUR/USD, European Central Bank, Federal Reserve, ING, Eurozone growth, Diesel crack spread, AUD/USD, USD/JPY

The euro is heading into a crucial week with more room to fall than to rise, and analysts at ING now see a slide toward the 1.150 level as a realistic scenario over the coming weeks, with both a European Central Bank meeting and a Federal Reserve decision on the calendar.

## A Dollar Story More Than a Euro Story
ING's near-term bearish tilt on EUR/USD is not really about weakness in the eurozone economy. The bank's own analysts have flagged that the pair's downside bias is still mainly driven by the view on the US dollar itself, and in particular by the expectation that the Federal Reserve will raise interest rates in September. A rate hike from the Fed typically makes dollar-denominated assets more attractive to investors, pulling capital away from the euro and other currencies and pushing EUR/USD lower.

Adding to that pressure, ING points out that the latest jump in energy prices is providing extra support for the case of a weaker euro. Rising energy costs tend to hurt energy-importing regions like the eurozone more directly, worsening their trade position and adding another reason for the currency to soften against the dollar.

## Eurozone's Trade Position Worsens
That energy squeeze is already showing up in the numbers. Real-time estimates tracked by ING suggest the eurozone's commodity terms of trade, essentially the price gap between what the region exports and what it has to pay for the commodities it imports, have now slipped to a level worse than the previous low recorded in March. A deteriorating terms of trade position means the eurozone is effectively paying more for the raw materials and energy it buys from abroad relative to what it earns from what it sells, a dynamic that weighs on the currency over time.

## Growth Was Revised Higher, But It Isn't Enough
The eurozone did get one piece of encouraging data. Second-quarter growth for the bloc was revised up from an initial 0.4% quarter-on-quarter reading to 0.6%, with the improvement traced back to stronger growth in Ireland, itself powered by a robust performance from multinational companies based there. Even so, that upward revision has not been enough to change ING's short-term call on the euro, since the dollar side of the equation, tied to Fed policy expectations and energy costs, is doing most of the work in the current outlook.

## Dovish Risk Looms Over Thursday's ECB Meeting
The next big test for the euro comes at Thursday's European Central Bank meeting. ING sees a real chance of a dovish outcome, arguing that markets have been pricing in aggressive tightening expectations that the ECB may not fully validate. If policymakers push back against that aggressive pricing, it would reinforce the case for further euro softness. As ING put it, "a move towards 1.150 over the coming weeks remains realistic in our view."

## Australian Dollar Extends Gains, Yen Keeps Dollar in Check
Elsewhere in currency markets, the Australian dollar was trading above 0.7200 during Tuesday's Asian session, its highest level since May 14. The broader US dollar has been under pressure as a rallying Japanese yen outweighs support the greenback might otherwise get from hawkish Fed bets and ongoing geopolitical tensions. Firming expectations that the Reserve Bank of Australia will deliver another rate hike later this month are also acting as a tailwind for the Aussie, though mixed trade balance data out of China kept the pair's gains in check.

The US dollar's move against the Japanese yen told a different story. USD/JPY rebounded from a six-month low touched below 153.00 earlier in the day to trade back above 154.00 in the second half of the session. Even so, the recovery looked more like a technical correction than a change in trend, since upbeat Japanese wage growth data and an upward revision to Japan's second-quarter GDP have reinforced bets that the Bank of Japan will raise rates next week, a scenario that continues to support the yen.

## Diesel Prices Send a Warning the Broader Oil Market Isn't
Away from currencies, the oil market itself looks calmer than it did a few months ago, but diesel is telling a very different story. The US diesel crack spread, which measures the premium of ultra-low sulphur diesel futures over West Texas Intermediate crude, recently surged above $100 per barrel for the first time on record, touching an intraday high of just over $102.00. That kind of spike points to tight diesel supply relative to crude, a signal that can eventually feed through into higher costs for transport, shipping and industrial users even if headline crude prices stay contained.

## What this means for you
This isn't India-specific news, so the practical impact falls mainly on currency traders, importers and exporters with dollar or euro exposure, and travelers.

- **For currency traders and investors:** A weaker euro against the dollar means euro-denominated assets could lose relative value in dollar terms over the coming weeks. Anyone holding EUR/USD positions or funds with euro exposure should watch Thursday's ECB decision and the September Fed meeting closely.
- **For importers and exporters:** Businesses that pay for goods in dollars but earn in euros could see costs rise if the euro keeps sliding toward 1.150. Exporters selling into the US could get a relative pricing advantage as their euro-priced goods become cheaper in dollar terms.
- **For travelers:** Anyone converting euros to dollars for a US trip may get fewer dollars per euro if the currency slips further, while dollar holders travelling to the eurozone could find their money stretches a little further.
- **For fuel and logistics costs:** The diesel crack spread crossing $100 a barrel for the first time signals tight diesel supply, which can push up transport and shipping costs even while crude oil prices stay relatively calm.

## Why this happened
The euro's expected slide is being driven mainly by forces on the dollar side of the pair rather than fresh weakness in the eurozone economy itself.

- **Fed rate-hike expectations:** Markets are pricing in a September interest rate hike from the Federal Reserve, which makes dollar assets more attractive and pulls investment away from the euro.
- **Rising energy prices:** A recent jump in energy costs adds further support for dollar strength against the euro, since the eurozone imports much of its energy and pays more for it when prices rise.
- **Worsening terms of trade:** Real-time estimates show the eurozone's commodity terms of trade have fallen below their previous low from March, meaning the region is paying relatively more for imports than it earns from exports.
- **Possible dovish ECB signal:** Markets have priced in aggressive tightening from the European Central Bank ahead of Thursday's meeting; if the ECB does not validate those expectations, it would add to euro weakness.

## Questions & Answers

### 1. How far could the euro fall against the dollar?
ING sees a move toward the 1.150 level as realistic over the coming weeks.

### 2. Why is the dollar strengthening against the euro?
Mainly because markets expect the Federal Reserve to raise interest rates in September, with rising energy prices adding further support.

### 3. What happened to eurozone growth data?
Second-quarter eurozone growth was revised up from 0.4% to 0.6% quarter-on-quarter, largely due to stronger Irish growth from multinational companies.

### 4. What is expected at Thursday's ECB meeting?
ING sees a risk of a dovish outcome, since markets have priced in aggressive tightening that the ECB may not fully deliver.

### 5. What is the diesel crack spread and why does it matter?
It's the premium of ultra-low sulphur diesel futures over WTI crude, and it recently surged above $100 a barrel for the first time, signalling tight diesel supply.

### 6. What's happening with the Australian dollar and Japanese yen?
AUD/USD rose above 0.7200 on RBA rate-hike expectations, while USD/JPY rebounded from a six-month low as Japan's strong wage and GDP data support bets on a Bank of Japan rate hike.

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