EUR/USD Outlook:
Slightly positive, but likely to move sideways as the rate is above its recent average but lacks a clear driving factor.
Key drivers:
• The European Central Bank is maintaining interest rates at 2%, indicating resilience in the eurozone's economy despite falling inflation.
• Oil prices are significantly above average, which can support the euro as it benefits exporters amid rising energy costs.
• The Federal Reserve has paused rate cuts, keeping the dollar steady but heightened geopolitical tensions are influencing its stability and attractiveness.
Range:
Expect the EUR/USD to hold within its recent 3-month range as mixed signals from both regions offer limited direction.
What could change it:
• Upside risk: A positive ECB policy shift or stronger-than-expected economic data from the Eurozone could boost the euro.
• Downside risk: Renewed geopolitical tensions could further depress the USD, leading to fluctuations in the exchange rate.
