April 29 (Reuters) - A sustained rise in oil prices - up more than $40 per barrel amid conflict in the Middle East - could reassert the long-term EUR/USD downtrend.

The conflict and resulting surge in oil prices should weigh on EUR/USD because the euro area is a large net energy importer; higher oil weakens terms of trade and real incomes. The United States, by contrast, is a major oil producer and exporter, and speculators are still betting on a stronger euro.

With traders predisposed to sell, existing bullish wagers can act as a drag on further euro gains, while any liquidation of those positions could accelerate a decline driven by higher oil prices.

The downtrend that began at 1.6040 in 2008 and reached 0.9528 in 2022 was followed by a rebound to 1.2084 in 2026, which met the 1.2016 target for a minor (38.2%) correction of the 1.6040-0.9528 slide.

From a technical perspective, the trend - refreshed by that correction and quickly followed by a drop to 1.1409 - remains intact and appears to be strengthening. With targets far below parity, it may be worth respecting.
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(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)