EUR/AUD Outlook:
Bearish, as the rate is below its recent average and near recent lows, influenced by easing Eurozone inflation and a strong Australian dollar.
Key drivers:
• Rate gap: The RBA has recently increased interest rates, while the ECB has maintained its rates, widening the gap in favor of the AUD.
• Risk/commodities: Oil prices are currently above average, which may strengthen the Australian dollar as high oil prices often improve commodity revenues.
• One macro factor: Eurozone inflation has eased to 1.7%, below the ECB's target, increasing concerns over potential future rate cuts.
Range:
The EUR/AUD is likely to hold within its recent range, moving cautiously as it remains under pressure.
What could change it:
• Upside risk: A surprising increase in Eurozone economic performance may shift attention back to the euro.
• Downside risk: Further tightening in Australian monetary policy could reinforce the AUD's strength against the euro.