What’s the Relationship Between Oil and the Dollar?

Most traders have noticed the inverse relationship between the dollar and commodity prices—include crude oil. While this isn’t surprising for commodities priced in dollars, the inverse relationship also holds true for commodities priced in other currencies. Commodity traders should keep these relationships in mind when trading futures contracts, particularly when the dollar index experiences significant movements due to interest rate decisions or other factors.

Let’s take a closer look at the relationship between crude oil and the dollar and what it means for traders.

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