EUR/AED Outlook:
The EUR/AED exchange rate is slightly positive, but likely to move sideways as the rate is above its recent average and trading near the mid-range of the last three months.
Key drivers:
- Rate gap: The European Central Bank is expected to maintain accommodative policy, while the UAE Central Bank has cut interest rates, keeping the AED stable in its peg against the dollar.
- Risk/commodities: Oil prices are currently elevated and significantly above average, which typically supports the euro due to its strong ties with the energy markets.
- One macro factor: Germany's recent decline in the ZEW economic sentiment indicator has added to European economic uncertainties, impacting the euro's strength.
Range:
EUR/AED is expected to drift within its recent range, reflecting mixed signals from economic data and geopolitical factors.
What could change it:
- Upside risk: A positive development in the Russia-Ukraine peace talks could boost the euro's outlook.
- Downside risk: Any further negative developments in German economic indicators could pressure the euro lower.
