EUR/AUD Outlook:
The outlook for EUR/AUD is slightly weaker, but likely to move sideways, as the rate is below its recent average and lacking a strong driving factor.
Key drivers:
• Rate gap: The European Central Bank is maintaining rates while the Reserve Bank of Australia recently raised rates, benefiting the AUD.
• Risk/commodities: Oil prices are volatile but currently above average levels, which can affect the euro given its correlation with energy prices.
• One macro factor: Australia's CPI rose above the target band, meaning more rate hikes are expected from the RBA, supporting the AUD.
Range:
Expect EUR/AUD to move within the recent range without significant breaks to the extremes.
What could change it:
• Upside risk: A positive shift in Eurozone economic data could strengthen the euro.
• Downside risk: Further signs of inflation or economic stabilization in Australia could boost the AUD further.