EUR/SGD Outlook:
Slightly weaker, but likely to move sideways as it is trading near recent lows and below its average.
Key drivers:
- Rate gap: The European Central Bank maintains interest rates amidst uncertainty, while Singapore's Monetary Authority has adopted a more accommodative monetary policy to support growth.
- Risk/commodities: Oil prices have surged significantly, affecting the euro negatively, as higher energy costs elevate inflation concerns in the Eurozone.
- One macro factor: Eurozone inflation has dropped below the ECB's target, raising questions about future monetary policies that could weigh on the euro.
Range:
The EUR/SGD is likely to drift within a stable range, testing recent lows without significant movement expected.
What could change it:
- Upside risk: A potential shift in ECB policy could restore confidence in the euro's strength.
- Downside risk: Continued geopolitical tensions related to Ukraine may further weaken the euro against the Singapore dollar.
