EUR/USD: Higher Oil supports Dollar – Societe Generale
Societe Generale’s Kit Juckes argues that sustained higher Oil prices are likely to support the Dollar and pressure EUR/USD. He recalls that when Brent traded near current levels in early 2022, EUR/USD fell sharply from around 1.13 to 0.95. Juckes maintains an end‑year EUR/USD forecast of 1.13, citing US economic strength and policy mix.
Oil shock risk keeps Euro vulnerable
"Oil prices are back at levels (USD 122p/b for Brent) that were seen in Q1 2022."
"However, concern that the current ceasefire could be followed by renewed conflict and further pressure on global oil supplies can be a trigger for the dollar to make a move higher – EUR/USD falling below the 1.14 low we saw at the start of the conflict."
"Our current end-year forecast is 1.13 for EUR/USD, because we haven’t seen signs of widespread shunning of US assets by investors and, in the longer run, it’s the strength of the US economy and the fiscal/monetary policy mix which determine rates, more than the desire of the President."
"The prospect of a longer conflict, leading to more serious energy shortages, increased geopolitical tension and higher-for-longer oil prices, may well break the deadlock and move currencies out of their ranges."
"EUR/USD hasn’t fallen further this morning, but a fresh test of that 1.14 year-to-date low makes sense in the coming days/weeks"
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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