EUR/USD Outlook: Slightly positive, but likely to move sideways as the euro is above its recent average yet lacks a single clear driver for further gains.
Key drivers:
• Rate gap: The European Central Bank has maintained a cautious stance on monetary policy, while the Federal Reserve has paused rate cuts, leading to a divergence between the two central banks.
• Risk/commodities: Rising oil prices have pushed the USD lower, benefiting the euro as investors seek stability in the Eurozone amid global uncertainty.
• One macro factor: Bulgaria's recent adoption of the euro is expected to enhance trade, although geopolitical tensions continue to cloud the outlook.
Range: The EUR/USD pair is likely to hold steady within its recent range, with minor fluctuations expected.
What could change it:
• Upside risk: A significant improvement in Germany's retail sales could boost the euro.
• Downside risk: An escalation in geopolitical tensions could pressure the USD further, impacting the euro's value.
