AUD/EUR Outlook:
Slightly positive, but likely to move sideways, as the AUD remains above its recent average without a compelling current driver.
Key drivers:
• Rate gap: The Reserve Bank of Australia has raised interest rates, while the European Central Bank has maintained a lower benchmark rate, creating a favorable environment for the AUD.
• Risk/commodities: Oil prices are currently above average, which generally supports the AUD due to Australia’s commodity export ties.
• One macro factor: Australian inflation remains above target, increasing pressure for further monetary tightening from the RBA.
Range:
Expect the AUD/EUR to hold steady within its recent 3-month range, with potential for minor fluctuations as markets digest various influences.
What could change it:
• Upside risk: A stronger-than-expected Australian job market report could boost AUD demand.
• Downside risk: Escalating geopolitical tensions related to Russia-Ukraine could negatively impact the EUR and indirectly affect the AUD.
