EUR/SAR Outlook:
The EUR/SAR is slightly positive and trading above its recent average. However, without a clear driving factor, it is likely to move sideways in the near term.
Key drivers:
• Rate gap: The European Central Bank is maintaining interest rates while the Saudi Central Bank keeps its peg to the U.S. dollar, limiting divergence.
• Risk/commodities: With oil prices showing volatility but remaining above the average, there is an indirect impact on the euro as energy costs influence inflation.
• One macro factor: Recent comments from ECB President Lagarde indicate a steady outlook for Eurozone inflation, which could keep interest rates stable.
Range:
The EUR/SAR is expected to hold within its recent range as it has shown stability rather than pushing towards extremes.
What could change it:
• Upside risk: A significant rise in oil prices could bolster the euro.
• Downside risk: A drop in Eurozone inflation data could pressure the euro lower.
