Forecasts for AUD to EUR
Recent forecasts suggest that the Australian dollar (AUD) may experience an upward trend against the Euro (EUR) heading into 2024. Currency market updates emphasize that FX analysts are largely optimistic about the AUD, citing interest rates, commodity prices, and risk appetite as key drivers. In 2022, the Reserve Bank of Australia (RBA) was conservative in raising interest rates compared to other central banks worldwide, which initially put the AUD under pressure. However, the market view indicates that as Australia's interest rate differentials narrow, with the country less likely to cut rates compared to others, the AUD could see a supportive lift. Furthermore, with the AUD recently achieving 90-day highs near 0.6083 against the EUR, this upward momentum is reinforced by market expectations that the RBA’s tightening cycle is ongoing.
On the flip side, the outlook for the Euro appears mixed. JP Morgan and ING analysts have provided differing targets for the EUR/USD pair, indicating potential Euro strengthening. Danske Bank, however, forecasts a downward trend for the Euro. The currency's performance has been shadowed by concerns over consumer confidence in the Eurozone, which HSBC believes may precede macroeconomic weakness. This suggests that while some EUR strengthening is possible based on anticipated US monetary policy adjustments, uncertainties surrounding the European Central Bank's (ECB) interest rate plans and the overall Eurozone economy may limit the Euro's upside potential. Notably, the EUR has recently faced downward pressure following last year's drop below parity, fuelled by geopolitical tensions and ECB policy uncertainty. This sentiment may carry over, affecting the AUD to EUR exchange rate.
Simultaneously, developments in the oil market depict a recent decline to USD 82.83, which is significantly below the 3-month average and indicative of a highly volatile environment. Given the Euro's sensitivity to oil price swings, this volatility could introduce additional complexity to the EUR's trajectory and hence impact the AUD/EUR exchange trajectory as well. With AUD rallying on the back of strong commodity prices and a solid risk appetite in the markets, both currencies are subject to a range of external factors that will ultimately shape the AUD to EUR exchange rate forecast moving into 2024.
