EUR/MYR Outlook: Slightly weaker, but likely to move sideways as the rate is below its recent average and near recent lows without a clear driver.
Key drivers:
• Rate gap: The European Central Bank's neutral monetary policy contrasts with Malaysia's economic resilience and favorable growth outlook, benefiting the MYR.
• Risk/commodities: With oil prices climbing above average, the stronger trend supports Malaysia's commodity exports, providing a potential lift for the MYR.
• One macro factor: Malaysia's GDP growth forecast of 5.1% underlines the economy's robustness, which strengthens confidence in the MYR.
Range: EUR/MYR is expected to remain stable within its recent 3-month range, showing limited movement as it tests lower levels.
What could change it:
• Upside risk: A shift in ECB's monetary policy that signals tightening could support the euro's recovery.
• Downside risk: Further appreciation of the MYR driven by continued foreign direct investment or trade surplus could pressure EUR/MYR lower.