EUR/NGN Outlook:
The EUR/NGN pair is slightly weaker, but likely to move sideways as it currently trades below its 90-day average and is near recent lows. The euro faces pressure from geopolitical concerns while the naira enjoys some support from recent gains.
Key drivers:
• Rate gap: The European Central Bank maintains interest rates, focusing on stability amid economic uncertainty, while the Central Bank of Nigeria is prioritizing exchange rate stability with a focus on gradual appreciation.
• Risk/commodities: Oil prices are above their recent average, which benefits the naira due to higher export revenue, but the ongoing volatility affects the euro's strength.
• One macro factor: Expectations for improved German consumer confidence may provide some support for the euro, depending on data release outcomes.
Range:
EUR/NGN is expected to hold within its recent range, experiencing occasional fluctuations but no significant breakouts.
What could change it:
• Upside risk: A resolution in the Russia-Ukraine conflict could bolster the euro.
• Downside risk: A sudden drop in global oil prices could weaken the naira, pressuring the EUR/NGN exchange rate.
