Bias: bullish-to-range-bound, as EUR/IDR trades above its 90-day average and sits in the upper half of the three-month range.
Key drivers:
- Rate gap: ECB policy remains neutral as inflation cools; Bank Indonesia cut rates to support growth, widening the gap and favoring euro strength versus IDR.
- Risk/commodities: Oil stays at multi-day highs with volatility; firmer oil improves Indonesia’s terms of trade and can bolster the rupiah modestly.
- Macro factor: Indonesia’s economy shows resilience with a trade surplus, even as foreign inflows slow, keeping downside risks to the IDR contained.
Range: EUR/IDR likely drifts toward the upper end of the three-month range, with the occasional push near the top.
What could change it:
- Upside risk: eurozone inflation surprises to the upside, prompting a firmer euro.
- Downside risk: a stronger rupiah from dollar repatriation or external balance improvements could push EUR/IDR lower.