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Currencies Outlook

Why Cheaper Oil Doesn't Lower Interest Rates

Thursday, 12 November 2026, written by Edward Markus

The oil price has fallen sharply, but that does not mean policy rates can come down. Lower oil prices push down inflation but also boost growth, and we do not expect the oil price to fall much further from here. Both the Fed and the ECB therefore keep talking about rate hikes. On balance, this is favourable for the dollar against the euro. In this report we discuss what this means for EUR/USD and the other major exchange rates.

This report is published: Weekly

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Previous reports

Crowding out is back

Thursday, 29 October 2026

Higher interest rates do not seem to deter governments and AI companies from heavy borrowing. This leads to "crowding out" and forces central banks to raise rates even further. Read our new currency report to find out what this means for the dollar, the euro and the other major currencies.

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Interest rates, energy prices and carry trades set the tone

Thursday, 15 October 2026

Rising interest rates are hitting Europe harder than the US and Japan, especially now that French public finances are under pressure. Find out in our latest FX report what this, together with carry trades and higher energy prices, means for EUR/USD and the other major currencies.

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Interest rate policy and political risks are taking their toll on the euro

Thursday, 01 October 2026

How much further do central banks need to raise interest rates to bring inflation back to 2%? That depends on second-round effects and on uncertain potential growth. The answer differs between the US and Europe, and that difference has major consequences for EUR/USD. Read our latest currency report to see how far those consequences reach and how the other major currencies respond.

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