Will lower oil prices push US Dollar down this time?

Over the last decade, oil prices and EUR/USD moved hand in hand. The US, as the biggest oil importer, gained the most from lower oil prices, pushing up the dollar and vice versa. This can well be different this time.

However, in recent years oil production has boomed in the US, reducing oil imports considerably.

In addition, lower oil prices will trigger a different policy response from the ECB and the Fed. Does this mean the tight relationship between EUR/USD and oil prices has been broken? We think in the coming months this will be the case and will present a better opportunity to buy dollars or sell euro’s...

For a more extensive analysis please read our most recent EUR/USD report and our Global Financial Markets report.

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