EUR/MYR Outlook:
Bearish, as the rate is below its recent average and near recent lows, influenced by Eurozone economic concerns.
Key drivers:
• Rate gap: The European Central Bank has maintained its interest rates, while the US Federal Reserve's rate cuts have contributed to a weaker US dollar, benefiting the MYR.
• Risk/commodities: Higher oil prices have generally supported the MYR, as Malaysia is a net oil exporter, but volatility in oil prices could create uncertainty.
• One macro factor: Eurozone inflation fell to 1.7%, under the ECB's target, leading to questions about future interest rate cuts, which may weigh on the euro's value.
Range:
The EUR/MYR is likely to hold within its recent trading range as underlying economic indicators pull in different directions.
What could change it:
• Upside risk: A significant improvement in Eurozone economic data could support the euro.
• Downside risk: Continued weakness in the eurozone economy and potential rate cuts by the ECB could further weaken the euro.