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Forex pairs in this Article » EUR/USD (Barcelona) - Greg Gibbs, FX Strategist at RBS believes that EUR weakness is possible despite higher Oil prices.

Key Quotes

“(Reserve) flow could also start to weigh on the EUR. Although tempering this to some extent may be recycling of petrodollars by reserve managers such as Saudi Arabia that may be banking on higher earnings from higher oil prices.”

“EUR is often thought to do well in oil shocks. Part of the reason for this may be that the Fed often sees higher oil prices as a reason to cut rates and the ECB sees them as a reason to hike.”

“However, the fact is that overnight, EUR yields and equities are down more than in the US. US 2yr yields have been more anchored in the recent up-move due to firm Fed guidance, so EUR yields are able to fall now a little more easily.”
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