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How to Use the Euro to Play Oil Prices

The Syncrude oil sands extraction facility near the town of Fort McMurray in Alberta Province, Canada.
Mark Ralston | AFP | Getty Images
The Syncrude oil sands extraction facility near the town of Fort McMurray in Alberta Province, Canada.

If oil prices resume their climb, this strategist says you can profit from a euro trade.

Oil prices have been locked in a trading range for months, but MacNeil Curry, head of foreign exchange and rates technical strategy at Bank of America Merrill Lynch, thinks that's about to change.

"Frankly, I like being short the euro against a broad basket of currencies, but euro-Canadian dollar right now to the downside has a lot of potential," he says. "Energy prices, after about eight months of range trading, look poised to resume their much larger bull trend, and the Canadian dollar should be a major beneficiary."

Curry told CNBC's Melissa Lee that he thinks Brent crude could move $20 to the top side.

Curry wants to sell the euro against the Canadian dollar with a stop of 1.3250 and a target of 1.2775, "and potentially ultimately to the 1.24 area," he says. "Euro-Canadian dollar is in a very strong downtrend, and it looks likely to persist."

That doesn't mean Curry is bullish on all commodity currencies, though. He is concerned about the outlook for base metal prices and the impact on the Australian dollar. But again, he has a plan to use the Canadian dollar to play that view: "I would be in favor of selling Aussie-CAD as well from a fundamental and technical perspective," he says.

You can watch the whole discussion on the video.

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