Bias: bearish-to-range-bound, current EUR/PKR sits below the 90-day average and in the lower half of the 3-month range.
Key drivers:
- Rate gap: ECB policy remains neutral with rates steady, while Pakistan's central bank continues to defend reserves and support stability.
- Oil price trend: Oil is above its three-month average and volatile, a development that tends to weigh on PKR through higher import costs and can push EUR/PKR toward the upper end if PKR weakens.
- Macro factor: PKR stabilization in early 2026, with confidence gradually improving and policy coherence across institutions supporting a more contained EUR/PKR path.
Range: EUR/PKR is likely to drift within the recent three-month range, with a likelihood of testing the lower end and limited momentum in either direction.
What could change it:
- Upside risk: oil remaining firm keeps PKR under pressure, potentially lifting EUR/PKR toward the upper end.
- Downside risk: further PKR stabilization or a softer oil backdrop could push EUR/PKR toward the lower end.
