# Why oil above $90 is quietly keeping the euro afloat before Thursday's ECB call

> With Brent back above $90 a barrel, EUR/USD should be sliding under 1.14, but a tightening link between energy prices and euro swap rates is holding the currency up as traders brace for Thursday's ECB decision.

**Type:** article · **Category:** Market · **Published:** 2026-07-21 · **Source:** TrendKia
**Canonical:** https://trendkia.com/en/market/brent-ke-90-dolara-ke-para-jane-ke-bavajuda-kyon-tika-hai-euro-guruvara-ko-ecb-ka-bara-phaisala-9383 · **Language:** English
**Tags:** Euro, EUR/USD, Brent crude, ECB meeting, swap spread, Norwegian krone, forex market, US inflation, finance

With Brent crude back above $90 a barrel, the standard playbook says EUR/USD should already be trading below 1.14. Instead the euro has proved surprisingly resilient, and the explanation sits in an unusual corner of the market: the increasingly tight relationship between energy costs and short-dated euro swap rates is doing much of the heavy lifting for the currency.

## How energy is feeding into euro rates
The mechanism is the same one that played out back in March. When oil and gas prices push higher, they lift the inflation outlook inside the eurozone, and that in turn drags money-market expectations for European interest rates upward. The result this time has been a sizeable narrowing in the EUR/USD two-year swap spread, the gap between what two-year euro and dollar swaps pay. As that gap shrinks in the euro's favour, holding euros becomes relatively more attractive, and the currency finds support even when the oil-price rulebook argues for weakness.

Two-year euro swap rates have now pushed to a fresh high for the year. On the other side of the Atlantic, the picture has softened: last week's US inflation figures nudged short-dated US rates down from their recent peaks, taking some of the yield advantage away from the dollar. Put the two moves together and the spread has compressed enough to keep the euro buoyant.

## The ECB decision that could change everything
Analysts at ING still lean towards EUR/USD eventually slipping back below 1.14 as long as energy prices stay elevated, arguing that the oil story ultimately weighs on a region that imports most of its fuel. "We do favour EUR/USD moving back below 1.14 on these high energy prices," the bank said. But there is a clear caveat hanging over that call: the European Central Bank meets this Thursday, and a surprise move cannot be ruled out.

The consensus is that the ECB will keep interest rates on hold this week. The twist is what it might signal for later in the year. With the conflict in the Middle East pushing energy prices up and stoking fresh inflation risks, policymakers could use Thursday's meeting to flag a possible rate hike as soon as September. Any hawkish hint of that kind would give the euro another leg of support and complicate the case for a slide under 1.14.

## Where the charts stand right now
For the moment the pair is pinned almost exactly at that 1.14 pivot, with live pricing showing it changing hands around 1.14 and essentially flat on the day. Momentum readings are middling rather than decisive: the 14-day RSI sits near 45, the ADX around 25 points to a weak, range-bound trend, and price is boxed inside its Bollinger bands. The longer-term backdrop is still heavy, with the 50-day moving average below the 200-day in a so-called death cross and the pair holding in a broader downtrend. Traders are watching roughly 1.13 as support and 1.15 as resistance, the levels that would decide the next real move.

## The krone quietly firms up
The energy theme is playing out beyond the euro too. The Norwegian krone, a high-yielding currency backed by an energy-exporting economy, has found buyers again after a brief stumble last week. Higher oil revenues tend to flow straight into Norway's terms of trade, and ING sees room for EUR/NOK to keep falling towards the 10.95 area, in other words further krone strength against the euro.

## Why US rates lost their shine
The softer dollar side of the equation has a concrete cause. America's June consumer price index fell 0.4% on the month, the steepest single-month drop since April 2020, and that pulled the annual inflation rate down to 3.5% from 4.2% in May, breaking a three-month run of accelerating prices. Core inflation, which strips out food and energy, was flat on the month and eased to 2.6% year on year, both a touch below what economists had expected. Cooler US inflation reduces the pressure on the Federal Reserve to keep rates high, which is exactly why short-dated US yields have drifted off their peaks and handed the euro part of its recent edge.

## The wider dollar and risk backdrop
All of this is unfolding against a jittery global mood. Markets are still digesting the weekend's US-Iran hostilities, and that caution has kept the dollar broadly steady rather than surging. Gold has been circling the $4,000 mark, struggling to build on intraday bounces as the twin forces of geopolitical tension and expectations of higher US rates support the dollar and cap the metal. Sterling, meanwhile, is defending small bids above 1.3450 against a listless dollar, with the UK employment report the next data point in focus. For the euro, the message from all these moving parts is the same: energy prices and rate spreads, not the usual risk-on, risk-off script, are steering the near-term path, and Thursday's ECB meeting is the event that could tip the balance.

## What this means for you
- **For forex traders:** EUR/USD is coiled at the 1.14 pivot with support near 1.13 and resistance near 1.15, so Thursday's ECB meeting is the trigger that could decide the next big move.
- **For travellers and importers:** a euro that stays firm against a softer dollar keeps eurozone trips and euro-priced goods relatively pricier for anyone converting from dollars.

## Questions & Answers

### 1. Why isn't EUR/USD below 1.14 despite Brent above $90?
Because the tight link between energy prices and short-dated euro swap rates has narrowed the EUR/USD two-year swap spread in the euro's favour, supporting the currency.

### 2. What is expected from the ECB this Thursday?
The ECB is widely expected to hold rates, but it could signal a possible hike as soon as September amid energy-driven inflation risks.

### 3. Where does ING see EUR/USD heading?
ING favours EUR/USD moving back below 1.14 as long as energy prices stay high.

### 4. What about the Norwegian krone?
The krone has firmed again after last week's wobble, and ING sees EUR/NOK losses extending toward the 10.95 area.

### 5. Why have US rates come off their highs?
June US CPI fell 0.4% on the month and annual inflation eased to 3.5% from 4.2%, reducing pressure on the Fed and pulling short-dated US yields lower.

### 6. What are the key EUR/USD levels right now?
Roughly 1.13 acts as support and 1.15 as resistance, with the pair pinned near 1.14.

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