Euro Picks Up as Easing Energy Crisis Reduces Dollar Demand
The single currency of the European countries (the euro) strengthened against the US dollar on Tuesday as oil prices retreated following U.S. President Donald Trump’s remark that the war in Iran would end soon.
Dollar demand increased following the global energy crisis. The dollar jumped as investors rushed into cash amid surging oil prices and heightened war risk, raising fears of weaker global growth.
This “cash dash” tends to favour the most liquid reserve currency, especially when markets sell stocks, bonds, and metals simultaneously, VT markets said in a note. On Tuesday, the euro traded around $1.16, hovering near two-month lows reached last week, while the dollar slipped against major trading peers.
According to data from the global commodity market, oil prices fell to $90 per barrel after Trump hinted at several measures to keep energy costs under control.
Higher oil prices have lifted global inflation risk and reduced appetite for risk assets. The US also benefits from its status as a net energy exporter compared with much of Europe, so traders often treat the dollar as a relative winner when energy prices jump.
The US Dollar Index (USDX) is trading near 99.35, up around 0.61%, as the dollar continues to strengthen following its rebound from the late-January low near 95.34.
The index has been steadily climbing in recent sessions, suggesting renewed demand for the dollar after a period of weakness earlier in the year. From a technical perspective, the index is now trading above its key short-term moving averages.
The 5-day moving average (98.98) and 10-day (98.41) are trending upward, while the 20-day (97.79) and 30-day (97.48) remain below current price levels and are beginning to slope higher.
A sudden escalation of tensions in the Middle East sent shockwaves through global energy markets. Following coordinated strikes by Israel and the United States against Iran on 28 February 2026, oil and natural gas prices rose sharply amid fears of supply disruptions.
Brent crude rose above $84 per barrel, up from around $70, while natural gas prices in Europe and the UK spiked even more sharply.
While the jump in oil prices is comparable with the spike during the 12-day war in 2025, the impact on natural gas prices in Europe and the UK has been even more pronounced.
This region relies heavily on imports, and it is particularly exposed to major chokepoints such as the Strait of Hormuz and the Suez Canal. Naira Halts Losses after $500m FX Injections
