AED/EUR Outlook: Slightly weaker, but likely to move sideways given that it is below its recent average and near recent lows without a clear driver.
Key drivers:
- The Central Bank of the UAE's stable monetary policy contrasts with the European Central Bank's cautious outlook, which keeps the euro subdued.
- Oil prices are currently near 90-day highs, which typically supports currencies tied to oil like the AED, but lack of clear direction in pricing limits its impact.
- The recent approval of record budgets by the UAE government signals strong fiscal support, contributing to economic stability and confidence in the Dirham.
Range: The AED/EUR rate is expected to drift within its recent range, as both currencies face headwinds that prevent significant movement in either direction.
What could change it:
- An uptick in eurozone growth data could shift expectations for European economic momentum, strengthening the EUR.
- A drop in oil prices could pressure the AED further, leading to a potential decline in its value against the Euro.
