EUR/CNY Outlook: Slightly positive, but likely to move sideways as the rate trades close to its average and recent highs, lacking a clear driving force.
Key drivers:
• Rate gap: The European Central Bank appears more cautious than the People's Bank of China, which is stabilizing the yuan and supporting its value.
• Risk/commodities: Oil prices have been volatile, now above average, which could influence the euro but does not provide adequate support for a decisive move.
• One macro factor: China’s economy is showing signs of recovery with unexpected growth, but this has yet to significantly impact the yuan's strength against the euro.
Range: The EUR/CNY is likely to drift within its recent range as neither currency presents strong driving factors for a breakout.
What could change it:
• Upside risk: A significant improvement in Eurozone economic indicators could strengthen the euro.
• Downside risk: An escalation in US-China trade tensions might put additional pressure on the yuan, thereby influencing the EUR/CNY rate negatively.
