AUD/EUR Outlook:
The AUD/EUR exchange rate is currently 4% above its recent average and near the high end of its 3-month range. This positioning suggests a bullish outlook, especially as robust employment data adds support.
Key drivers:
• Rate gap: The Reserve Bank of Australia's tightening stance contrasts with the European Central Bank's accommodating approach, supporting the AUD.
• Risk/commodities: Strengthening oil prices may bolster demand for Australian exports, which boosts the AUD as commodities are key economic drivers.
• One macro factor: Improved domestic consumer confidence is expected to encourage further spending, enhancing the AUD's value.
Range:
The AUD/EUR is likely to hold around current levels, with chances of drifting toward the upper side of the recent price range.
What could change it:
• Upside risk: An unexpected surge in Australian economic data could reinforce the current bullish trend.
• Downside risk: A significant downturn in commodity prices or geopolitical tensions could pressure the AUD lower.