0804 GMT - A tighter correlation between energy prices and short-dated euro swap rates seems to be supporting the euro as the Middle East conflict escalates, ING's Chris Turner says in a note. Higher energy prices have driven a sizeable narrowing in euro-dollar two-year swap spreads, he says. Two-year euro swap rates are trading at a new high for the year, while last week's lower-than-expected U.S. inflation data has left short-dated U.S. rates off their highs, he says. "We do favor the euro moving back below $1.14 on these high energy prices, but we are cognisant of the risk of a surprise rate hike from the European Central Bank this Thursday." The euro rises 0.1% to $1.1445.(renae.dyer@wsj.com)

(END) Dow Jones Newswires

July 20, 2026 04:04 ET (08:04 GMT)

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