EUR/SAR Outlook:
The euro is currently below its recent average and near recent lows, indicating a bearish outlook. The euro faces pressure from rising energy prices and economic concerns in the Eurozone.
Key drivers:
• Rate gap: The European Central Bank is likely to adopt a more accommodative stance due to economic pressures, while the Saudi Arabian Monetary Authority maintains its peg to the US dollar.
• Risk/commodities: Current oil prices are significantly above average, which negatively impacts the euro given Europe’s energy dependency.
• One macro factor: Latest retail sales data for Germany showed a larger-than-expected contraction, suggesting weakening consumer demand.
Range:
EUR/SAR is expected to drift within its recent range, with possible continued pressure near the lower end.
What could change it:
• Upside risk: A decrease in energy prices could help stabilize the euro.
• Downside risk: Continued geopolitical instability may exert further downward pressure on the euro.
