EUR/MYR Outlook:
The EUR/MYR exchange rate is likely to decrease as it is currently trading below its recent average and near recent lows. The recent pressure on the euro, combined with Malaysian economic resilience, supports this outlook.
Key drivers:
- Rate gap: The European Central Bank's accommodative policies contrast with Malaysia's stable overnight policy rate, reinforcing a weak euro against the MYR.
- Risk/commodities: Oil prices are currently higher than average, impacting the MYR positively as Malaysia is an oil exporter, while the euro remains vulnerable to negative geopolitical events.
- One macro factor: Malaysia's construction sector showed strong growth, boosting economic confidence and demand for the MYR.
Range:
Expect the EUR/MYR to drift within its recent range, likely testing the lower end as it trades near recent lows.
What could change it:
- Upside risk: A sudden improvement in Eurozone economic indicators or stronger geopolitical stability could strengthen the euro.
- Downside risk: Further deterioration in the euro's position due to unfavourable geopolitical developments could lead to deeper losses for the currency.