In today's NY FX market, EUR/USD fell to around $1.1565 and EUR/JPY briefly fell into the 183 range as the correlation between higher oil prices and euro weakness strengthened.
The euro fell to around $1.1565 today and is currently finding initial support at its 100-day moving average. Meanwhile, yen strength during NY trading pushed EUR/JPY briefly into the 183 range. The decline also took the pair below its 200-day moving average at times, and the market is watching how it develops.
The preliminary August eurozone consumer price index rose 3.3% year on year, in line with market expectations, reinforcing expectations of an ECB rate hike in September. However, the euro remains under pressure, with the divergence between US-European interest-rate differentials and exchange rates becoming increasingly pronounced.
Higher oil prices are a factor behind this. As Europe depends on energy imports, higher oil prices fuel inflation concerns and drive interest rates higher, weighing on the euro. This has strengthened the correlation between higher oil prices and euro weakness, creating a situation in which the euro is difficult to buy even when the interest-rate differential narrows.
The article points to the relationship between higher oil prices and euro weakness while conveying an intention to monitor how the market develops.