AUD/EUR Outlook:
The AUD/EUR exchange rate is slightly positive, trading above its recent average and near the higher end of its 3-month range, but lacks a strong driver to sustain momentum.
Key drivers:
• Rate gap: The Reserve Bank of Australia has maintained an interest rate advantage over the European Central Bank, providing some support for the AUD.
• Risk/commodities: Recent spikes in oil prices negatively impact the AUD, raising costs for Australia as a net energy importer.
• Macroeconomic factor: Australia's trade figures, expected to show a widening surplus, could provide a boost to the AUD.
Range:
The AUD/EUR is likely to drift within its recent range, testing the upper limits but may face periodic volatility.
What could change it:
• Upside risk: A stabilization of global risk appetite could strengthen the AUD as markets improve.
• Downside risk: Continued geopolitical tensions could further weaken the AUD, limiting upward movement against the EUR.
