EUR/TRY Outlook:
The EUR/TRY rate at 51.42 is 1.2% above its recent average, suggesting a slight bullish outlook but with risks ahead. It is important to monitor the impact of ongoing geopolitical concerns and energy prices.
Key drivers:
- Rate gap: The European Central Bank is facing internal inflation challenges while the Central Bank of Turkey is projected to continue easing its monetary policy, widening the interest rate gap.
- Risk/commodities: Rising oil prices are at 90-day highs and negatively impact the Euro as Europe is a major energy importer, leading to inflationary pressures.
- One macro factor: Recent reports indicate a significant contraction in German retail sales, which could further weaken the euro’s position.
Range:
The EUR/TRY is expected to hold steady within its recent 3-month range but may face pressure due to external factors.
What could change it:
- Upside risk: A de-escalation of geopolitical tensions could support the euro’s recovery.
- Downside risk: Continued increases in energy prices could further burden the euro and lead to a decline.