EUR/SAR Outlook:
The EUR/SAR is slightly weaker, but likely to move sideways as it trades just above its recent average and is near recent lows. Current pressures stem from declining consumer confidence in the Eurozone.
Key drivers:
• Rate gap: The European Central Bank's accommodative policy contrasts with the stable value of the Saudi Riyal, which is fixed to the US dollar.
• Risk/commodities: Fluctuating oil prices, currently near recent highs, can strengthen the SAR, given Saudi Arabia's dependence on oil revenue.
• One macro factor: The upcoming PMI data from the Eurozone may influence the euro's performance if it shows stronger growth, but actual outcomes are uncertain.
Range:
EUR/SAR is likely to test extremes within a stable range, reflecting continued fluctuations just above its recent average.
What could change it:
• Upside risk: A significant improvement in Eurozone economic indicators could bolster the euro.
• Downside risk: Continued geopolitical tensions in Europe, particularly concerning the ongoing war in Ukraine, could weaken the euro and push the rate lower.