EUR/SAR Outlook:
Slightly positive, but likely to move sideways, given that the rate is above its recent average and lacks a clear supporting driver.
Key drivers:
• Rate gap: The European Central Bank (ECB) is holding interest rates steady while ongoing economic challenges loom for the Eurozone, impacting the euro's strength relative to the Saudi Riyal.
• Risk/commodities: Oil prices are currently above average, suggesting a potential positive impact on the Saudi economy and, consequently, the riyal's stability.
• One macro factor: The Eurozone's inflation has dropped below the ECB's target, which raises concerns about possible future interest rate cuts, potentially weighing on the euro.
Range:
The EUR/SAR exchange rate is likely to hold steady within its recent range, as factors influencing both currencies remain mixed.
What could change it:
• Upside risk: A significant improvement in Eurozone economic data could shift expectations and bolster the euro.
• Downside risk: Further disappointing industrial data from Germany could pressure the euro against the riyal.
