EUR/AED Outlook: The outlook is slightly positive, but likely to move sideways, as the euro is above its recent average but lacks a clear driving force.
Key drivers:
• Rate gap: The European Central Bank maintains a neutral stance, while the UAE's central bank aligns with the US Federal Reserve's higher interest rates, supporting the AED.
• Risk/commodities: Oil prices are trading above average, which could benefit the euro, though variations in energy costs create uncertainty.
• One macro factor: Germany’s consumer confidence index is a vital indicator; improvements could bolster the euro as domestic sentiment plays a significant role.
Range: Movements in EUR/AED are likely to drift within the recent 3-month range, reflecting limited directional changes.
What could change it:
• Upside risk: A substantial improvement in Germany’s consumer confidence could enhance demand for the euro.
• Downside risk: A stabilization of oil prices or renewed geopolitical tensions could negatively impact the euro's attractiveness.
