EUR/PHP Outlook: Slightly positive, but likely to move sideways as the rate is above its recent average but lacks a clear driver for further gains.
Key drivers:
• Rate gap: The European Central Bank's cautious approach contrasts with the Bangko Sentral ng Pilipinas' expected rate cuts due to weak growth, favoring the euro.
• Risk/commodities: With oil prices trending higher, the euro could see some support due to its negative correlation with the weakening dollar, although this has not translated into significant gains for the EUR.
• One macro factor: The outcome of Germany's consumer confidence index may influence euro strength; an improvement could lead to stronger demand.
Range: The EUR/PHP is likely to hold within its recent range as the current factors do not indicate strong momentum in either direction.
What could change it:
• Upside risk: A robust report from Germany signaling improved consumer sentiment could strengthen the euro.
• Downside risk: Continued peso depreciation, driven by weak economic prospects and proposed U.S. legislation affecting local industries, may pressure the euro against the Philippine currency.
