EUR/AUD Outlook:
The EUR/AUD is currently bearish, trading significantly below its 90-day average and at the lower end of its 3-month range. This reflects ongoing geopolitical tensions and high oil prices impacting the EUR and AUD.
Key drivers:
• Rate gap: The European Central Bank is facing inflation and growth challenges, while the Reserve Bank of Australia has room to adjust rates amid a risk-off environment.
• Risk/commodities: Current high oil prices are severely affecting the EUR, as Europe imports most of its energy. This trend also puts pressure on the AUD, which is losing ground due to concerns about global growth.
• One macro factor: Rising geopolitical uncertainty is affecting both currencies, with the AUD especially vulnerable as a risk-sensitive asset losing appeal during heightened instability.
Range:
The EUR/AUD is expected to drift within its current range, testing recent lows.
What could change it:
• Upside risk: A rapid de-escalation of geopolitical tensions could support a rebound in both currencies.
• Downside risk: Continued increase in oil prices could further dent both the EUR and AUD, pushing the rate lower.
