The current market bias for the EUR to PHP exchange rate is bearish. Key drivers include the interest rate differential, as the European Central Bank (ECB) has paused rate hikes amid concerns over inflation and growth, while the Bangko Sentral ng Pilipinas (BSP) has recently cut rates, widening the gap against the PHP. The ongoing geopolitical tensions from the war in Ukraine continue to create uncertainty, which also weighs on the euro, while the Philippine peso struggles with a record low exchange rate.
In terms of macroeconomic factors, inflation is a concern for both economies, but the ECB is wary of a stronger euro hampering its targets. The expected near-term trading range suggests EUR to PHP may fluctuate, potentially maintaining stability around recent levels but within a tight band.
An upside risk could emerge from improved investor sentiment towards the eurozone as economic data turns positive. Conversely, a downside risk might stem from further rate cuts or economic deterioration in the Philippines, which could devalue the peso further.
