EUR/SGD Outlook:
The EUR/SGD is likely to decrease as it currently trades near 90-day lows and is significantly below its recent average. The euro faces downward pressure due to geopolitical risks and rising energy costs.
Key drivers:
• Rate gap: The European Central Bank's struggle with high energy prices contrasts with the more stable monetary policy of the Monetary Authority of Singapore.
• Risk/commodities: With oil prices at 90-day highs, the euro is adversely affected as rising costs threaten trade balances and inflation in the Eurozone.
• One macro factor: Eurozone inflation remains high, but it hasn't strengthened the euro due to ongoing geopolitical concerns linked to the Middle East.
Range:
EUR/SGD is expected to hold within a narrow range, trading near recent lows and facing resistance to movement upwards.
What could change it:
• Upside risk: A resolution to geopolitical tensions could lift the euro's appeal.
• Downside risk: Continued volatility in oil prices may further weaken the euro's position.
