LONDON (Realist English). On September 2, 2026, the euro fell to a two‑week low against the dollar, while options traders rushed to hedge against further weakening of the European currency.
The drop, triggered by rising energy prices amid US‑Iran escalation and higher US Treasury yields, has forced the market to revise its forecasts.
Options positioning has shifted in favour of the dollar for nine consecutive trading sessions — the longest continuous streak since 2017.
Euro Under Pressure from Energy and Debt Shocks
As of September 2, the single European currency had lost 0.2%, falling to $1.1566 — its lowest level in two weeks. The options positioning indicator fell to its most “bearish” level in nearly a month, indicating a sharp deterioration in market sentiment.
The main drivers of the decline are two interrelated factors:
- Rising energy prices. The resumption of hostilities between the US and Iran — strikes on Larak Island and retaliatory missile attacks on US bases in Jordan — has once again pushed oil and gas prices higher. This worsens the terms of trade for Europe, which remains a major energy importer, and increases inflationary pressure on the eurozone economy.
- Rising US Treasury yields. The yield on 10‑year Treasuries continues to hold at multi‑year highs, attracting capital into dollar assets and putting additional pressure on the euro.
Nine Sessions in a Row: The Battle for the Dollar
A key indicator of alarm is the direction of options flows. For the past nine trading days, options positioning has consistently shifted in favour of the dollar — the longest such streak since 2017. This means traders are systematically increasing their bets on a stronger dollar and a weaker euro.
| Indicator | Value |
| EUR/USD rate | $1.1566 (-0.2%) |
| Low | Two‑week low |
| Options positioning indicator | Most “bearish” in a month |
| Shift in favour of dollar | 9 consecutive sessions (longest streak since 2017) |
ING Forecast: $1.15 by Month End
Against the backdrop of deteriorating conditions, Dutch bank ING has issued a gloomy forecast. ING’s global markets head, Chris Turner, expects the euro to continue its decline and fall to $1.15 by the end of September.
In his view, the combination of three factors — the renewed conflict in the Persian Gulf, the Federal Reserve’s hawkish rhetoric, and the worsening trade balance of the eurozone — makes further euro weakening nearly inevitable.
The Euro Trapped Between Geopolitics and Monetary Policy
The euro’s fall to a two‑week low and record‑high protective option positions are not a statistical anomaly but a reflection of a systemic crisis of confidence in the European currency.
The eurozone finds itself caught between two fires: on one side, the Persian Gulf war, which pushes energy prices up and worsens trade terms; on the other, the hawkish rhetoric of the Fed, which makes the dollar more attractive to investors.
Notably, the nine‑day streak of shifts in favour of the dollar — the longest since 2017 — coincides with a period when markets are pricing in an ECB rate hike on September 10. This means that even the expected tightening of monetary policy in Frankfurt cannot reverse the trend: external shocks have proved stronger than the regulator’s internal signals.
The main challenge for the euro is not the ECB’s decision on September 10, but geopolitics and energy. If the Persian Gulf conflict drags on and the Fed continues to tighten, a fall below $1.15 will become only a matter of time. The nine‑day streak of shifts in favour of the dollar — the longest continuous trend since 2017 — indicates that markets are already pricing in this scenario. And as long as Europe remains a hostage to imported energy, its currency will remain under geopolitical pressure.
