Brent crude for August delivery dipped to $74.76 per barrel, a stark retreat from the $115 peak recorded in May. The stabilization of flows through the Strait of Hormuz has effectively neutralized the inflationary shock that prompted the European Central Bank to initiate a 25-basis-point rate hike earlier this month. As energy costs retreat, the market has slashed the probability of a follow-up hike from 50% to 20%.

Economic data complicates this shift, as June’s Purchasing Managers' Index indicates that Eurozone business activity has contracted for three consecutive months. While the bank remains bound to its 2% inflation target, the combination of weakening growth and falling energy prices is forcing a pivot. Meanwhile, the Federal Reserve maintains a hawkish posture, bolstered by resilient U.S. consumer spending. This policy gap has pushed the U.S. dollar index to 101.45, driving a steady migration of capital away from European markets toward the greenback.