AUD/EUR Outlook:
The AUD/EUR is currently likely to increase as it is trading near 90-day highs and well above its recent average, supported by rising global risk appetite and commodity demand.
Key drivers:
• Rate gap: The Reserve Bank of Australia is expected to maintain a more aggressive monetary policy compared to the European Central Bank, which is keeping rates stable.
• Risk/commodities: Recent strength in oil prices has boosted the AUD, making Australian exports more attractive as global demand for commodities rises.
• One macro factor: Improved consumer confidence in Australia indicates that domestic demand may bolster the Australian economy, further supporting the AUD.
Range:
Movement in the AUD/EUR is likely to drift within the recent 3-month range as it tests the higher extremes.
What could change it:
• Upside risk: A significant stabilization in global oil prices could enhance the AUD further.
• Downside risk: Any negative shock to consumer confidence or geopolitical tensions could weigh on the Australian dollar.