AUD/EUR Outlook:
The AUD is currently above its recent average and near recent highs, giving it a bullish outlook. This is supported by the Australian economy showing strong indicators and favorable commodity prices.
Key drivers:
- Rate gap: The Reserve Bank of Australia's recent interest rate hike is more aggressive than the European Central Bank's neutral stance, supporting the AUD.
- Risk/commodities: With oil prices well above their average, reflecting global demand pressures, the AUD benefits as a commodity currency.
- One macro factor: Sticky inflation in Australia raises the possibility of further rate hikes, boosting the AUD's attractiveness.
Range:
The AUD/EUR is likely to drift higher within the current 3-month range, testing recent highs.
What could change it:
- Upside risk: A further increase in commodity prices could strengthen the AUD.
- Downside risk: Increased geopolitical uncertainties could shift investor focus away from the AUD.