Bias: Range-bound, current EUR/PKR is near 30-day lows, below the 90-day average, and sits in the lower part of the 3-month range.
Key drivers:
• Rate gap: The ECB’s policy stance remains higher than Pakistan’s central bank, widening the gap and keeping the euro relatively firm against the rupee, even as eurozone data prints mix.
• Oil price: Oil trades at elevated levels with notable volatility, lifting Pakistan’s import bill and adding upside pressure to EUR/PKR as energy costs drive FX flows.
• Macro factor: Pakistan inflation is expected to ease gradually, supporting PKR resilience and reducing some pressure on EUR/PKR, while eurozone price trends stay on target.
Range: EUR/PKR is likely to drift within the recent 3-month range, with occasional tests toward the lower end if risk appetite softens or energy volatility spikes.
What could change it:
• Upside risk: a surprise hawkish tilt from the ECB or stronger eurozone data could push EUR/PKR higher.
• Downside risk: an improvement in Pakistan’s external position or a softer oil market could pull EUR/PKR lower.