EUR/SAR Outlook:
The EUR/SAR exchange rate is slightly positive, trading above its 3-month average and near recent highs. The outlook appears stable, but a lack of strong drivers could limit significant movement.
Key drivers:
• Rate gap: The European Central Bank has maintained interest rates, contrasting with Saudi Arabia's fixed riyal to the US dollar.
• Risk/commodities: With oil prices at 90-day highs, there is upward pressure on the Saudi economy, which could influence the riyal.
• Macro factor: Upcoming inflation data from Germany may influence the euro, potentially dampening its rise if inflation cools more than anticipated.
Range:
EUR/SAR is expected to hold within its recent range, with limited movement anticipated.
What could change it:
• Upside risk: A stronger-than-expected German CPI print could boost the euro's appeal.
• Downside risk: A significant drop in oil prices could weaken the riyal and pressure the euro.