MUFG Research discusses EUR/USD outlook in light of high oil prices.

"After of six weeks of conflict to the point of the ceasefire, it is clear that the US dollar has underperformed our expectations based on our original expected moves. Based on a 40%ish move higher in crude oil prices we would have expected to see a EUR/USD drop of 3% or so. The EUR/USD rate is currently 1.0% lower. The change in swap spreads against the dollar and the lack of risk-off trading conditions have helped contribute to that," MUFG notes.

"Under our new Scenario 1 of crude remaining around current levels before slowly retracing from Q3 onwards, we would expect to see EUR/USD trade around current levels to lower before moving higher in the second half of the year," MUFG adds.