XYZ wants to hedge against depreciations of the euro and is also concerned about the price of

Question:

XYZ wants to hedge against depreciations of the euro and is also concerned about the price of oil, which is a significant component of XYZ's costs. However, there is a positive correlation between the euro and the price of oil: The euro appreciates when the price of oil rises. Explain how an exchange option based on oil and the euro might be used to hedge in this case. Discuss.