Bias: EUR/IDR is bullish-to-range-bound, trading above its 90-day average and in the upper half of the last three months' range.
Key drivers:
- Rate gap: The ECB remains neutral with rates in a steady range, while Bank Indonesia has signalled an accommodation bias in past moves, narrowing the gap and leaving room for local fundamentals to move the curve.
- Risk/commodities: Oil has moved to endure higher levels with volatility, boosting Indonesia’s terms of trade and offering some rupiah support, which could cap euro gains in this pair.
- Macro factor: Eurozone inflation is seen easing toward target, helping the ECB keep policy neutral and supporting euro stability against global headwinds.
Range: It is likely to drift within the three-month band, with occasional tests near the high end but not a clear breakout.
What could change it:
- Upside risk: A stronger eurozone data surprise and clearer ECB hawkish commentary could lift EUR/IDR.
- Downside risk: A firmer dollar or softer eurozone data could push EUR/IDR lower.