The EUR/USD currency pair one of the biggest crosses is fighting like hell to overcome significant obstacles. As of writing, it’s changed hands just above the 1.1350 level during European on Tuesday. The trade wars and new global economic expectations of the world’s largest economies are partly to blame for this downward trend. Analysts argue that these changes, especially at the national level in the oil sector, have been decisive in creating the current economic picture.
And on the same day, the International Energy Agency (IEA) released their latest forecasts, pointing to a very troubling demand slowdown in oil consumption. In its initial projections, the IEA lowered growth expectations for 2025 down to 1 million bpd. They have since lowered this forecast, a lot, to only 730,000 b/d, representing a cut of almost one-third. This change accounts for the deepening effects of trade tensions on global economic activity and subsequently, oil demand.
The IEA expects demand to continue to decline through 2026. They have since revised down their high side, to as low as 690,000 b/d. Either way, these three predictions point to the gloom in the picture. The agency is bracing for more cuts, should the ongoing tariff disputes rage on. At a time of inflation, low prices provide some relief to consumers. They likely will not offset the more far-reaching effects on global oil markets.
Trade wars aren’t just rewriting prospects for global growth oil demand, they’re rewriting the outlook for currencies like the euro. With the EUR/USD still down on their luck, it serves as a measure of how uneasy investors are during an evolving economic landscape. The interdependence of currency markets and commodity prices is made clearer with each of these trade disputes that materializes.
With the IEA widely seen as the main intergovernmental actor in energy, traders are watching for these IEA-intervened markets. Further reductions in projected demand would further exacerbate volatility in oil and currency valuations. The IEA’s position is an important signal that it’s willing to act if the global economic situation worsens.
These times of heightened geopolitical tensions and US-dominated trade wars have an influence not only on oil consumption trajectories but on currency pairs. The euro is under pressure in the market at the moment. If the IEA’s predictions come to pass, it will further weaken as demand levels plateau.