MUFG analysts keep a short EUR\/USD position, linking euro weakness to higher oil and European natural gas prices and a larger negative terms-of-trade shock for Europe. They estimate that for every 10% rise in crude, EUR\/USD falls about 0.7%.<\/p>\n
They say EUR\/USD has dropped 3.0%\u20133.5% since the crisis began, which they relate to a 50% rise in crude oil prices. They also note EUR\/USD has broken below 1.1500 support.<\/p>\n
In Scenario 1, Brent crude is put at USD 75\u201385 per barrel, including a USD 10 per barrel risk premium for a period. Under this outcome, EUR\/USD is placed in a 1.16\u20131.18 range.<\/p>\n
In Scenario 2, crude at USD 110 per barrel is described as a near 60% rise from pre-conflict levels, implying EUR\/USD near 1.1300. They set a 1.1200\u20131.1600 EUR\/USD range.<\/p>\n
In a more severe case, crude rises 100% and European natural gas prices rise by more than that. EUR\/USD is set at 1.0700\u20131.1300, with scope to reach 1.0700.<\/p>\n
We continue to hold a short EUR\/USD trade view, as the risk in the coming weeks is skewed toward further dollar strength. Europe’s high dependency on energy imports makes the euro particularly vulnerable to the recent uptick in energy costs. With Brent crude now trading above $95 per barrel, up nearly 15% since the start of the year, the negative terms-of-trade shock for the Eurozone is intensifying.<\/p>\n
This situation reflects the patterns we identified back in 2025 when analyzing the 2022 energy crisis. Our regression models then showed a 0.7% drop in EUR\/USD for every 10% gain in crude oil, a dynamic that appears to be reasserting itself today. Recent Eurozone industrial production figures have already shown a 0.5% contraction last month, suggesting the economy is struggling to absorb these higher costs.<\/p>\n
Even with the European Central Bank signaling a potential rate hike, this is unlikely to support the euro in a meaningful way. The U.S. economy appears more resilient, with the latest jobs report from February 2026 showing a robust addition of over 250,000 jobs, giving the Federal Reserve more room to maintain its tight policy. This policy divergence strongly favors the U.S. dollar over the euro.<\/p>\n
Given this outlook, derivative traders should consider strategies that profit from a decline in EUR\/USD. Buying put options on the euro or establishing bear put spreads offers a defined-risk way to position for a potential move toward the 1.0500-1.0700 range. We see the current level around 1.0650 as a fragile support that is likely to break under sustained energy price pressure.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" MUFG stays short EUR\/USD, citing oil and gas-driven terms-of-trade shocks; higher crude implies lower EUR\/USD.<\/p>\n","protected":false},"author":103,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-51547","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/51547","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=51547"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/51547\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=51547"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=51547"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=51547"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}