EUR/AED Outlook:
The EUR/AED is slightly positive but likely to move sideways as it trades just above the recent average and shows no clear driver pushing it higher. Currently, it is near the upper end of its recent range.
Key drivers:
• Rate gap: The European Central Bank is maintaining its interest rates, which keeps the euro steady compared to the UAE Dirham, as the latter is pegged to the US dollar.
• Risk/commodities: Oil prices are currently volatile, trading above average levels; fluctuations in oil can affect euro demand, as the Eurozone is sensitive to energy costs.
• One macro factor: Inflation in the Eurozone is projected to stabilize at around 2%, which could limit the euro's immediate upside potential.
Range:
EUR/AED is likely to hold within its recent three-month range, showing stability around current levels.
What could change it:
• Upside risk: A significant improvement in Eurozone economic data could boost the euro's strength.
• Downside risk: A decline in oil prices could create downward pressure on the euro due to its market implications.
