EUR/HKD Outlook:
The outlook for EUR/HKD is slightly positive, but likely to move sideways. The rate is currently above its recent average but lacks a distinct driver to provide clear momentum.
Key drivers:
• Rate gap: The European Central Bank (ECB) continues to manage inflation carefully, while the Hong Kong Monetary Authority (HKMA) remains focused on stabilizing the HKD amid significant interventions.
• Risk/commodities: Oil prices are currently above average, which can indirectly support the euro as energy costs impact overall inflation in the Eurozone.
• One macro factor: Ongoing geopolitical tensions surrounding Ukraine are affecting the euro’s stability, with a mix of impacts on investor confidence.
Range:
Movement is expected to hold within the recent 3-month range due to the lack of strong directional influences.
What could change it:
• Upside risk: A resolution in the Ukraine conflict could enhance investor confidence and support the euro.
• Downside risk: Increased volatility in global markets or a significant drop in oil prices may put pressure on the euro.