EUR/INR Outlook:
The EUR/INR is currently likely to increase as it is trading above its recent average and is near the 7-day highs. Factors like the recent stronger performance of crude oil prices are contributing to this upward movement.
Key drivers:
• Rate gap: The European Central Bank (ECB) has maintained its interest rates, while the Reserve Bank of India (RBI) is adjusting its policies flexibly, which can support the INR.
• Risk/commodities: Crude oil prices are significantly above their recent average. Since India is a major oil importer, higher oil prices can pressure the INR but currently dovetail with EUR strength.
• One macro factor: The unexpected drop in German consumer confidence highlights ongoing economic challenges for the Eurozone, putting some pressure on the EUR.
Range:
The EUR/INR is expected to drift within its 3-month range, showing potential for additional gains based on current trends.
What could change it:
• Upside risk: A positive shift in Eurozone economic data could strengthen the EUR further.
• Downside risk: Continued geopolitical tensions affecting the INR could lead to its depreciation against the EUR.
