Bias: bearish-to-range-bound, EUR/MYR sits below its 90-day average and near the lower end of the three-month range.
Key drivers:
• Rate gap: The ECB holds policy in a neutral stance, while Bank Negara Malaysia has room to support growth, narrowing the policy rate gap that typically weighs on the EUR/MYR amid mixed inflation dynamics.
• Risk/commodities: Oil trades at higher levels with volatility, which supports Malaysia’s export earnings and the MYR, while higher energy costs could press on the euro, especially in energy-importing economies.
• Macro: US rate cuts have softened the dollar, a factor that tends to support EM currencies including the MYR as global risk assets recover.
Range: EUR/MYR is likely to drift within its recent range, with a tilt toward the lower end in the near term unless data surprises to the upside.
What could change it:
• Upside risk: euro-area data surprises to the upside or an earlier ECB tightening signal could lift EUR against the MYR.
• Downside risk: renewed dollar strength on risk-off flows could push EUR/MYR lower.
