EUR/USD Outlook:
Slightly positive, but likely to move sideways as the rate is above its recent average and lacks a clear driver.
Key drivers:
• The European Central Bank (ECB) is maintaining interest rates amidst economic resilience in the Eurozone, limiting upward movement in the euro.
• Recently, oil prices have shown volatility but are above average, which may affect the euro’s strength due to its impact on inflation in the Eurozone.
• Eurozone inflation has dropped below the ECB’s target, raising concerns over potential policy changes or rate cuts that could negatively impact the euro.
Range:
EUR/USD is expected to drift within the recent range as it remains elevated above the three-month average.
What could change it:
• Upside risk: A significant reduction in geopolitical tensions could restore confidence in the euro.
• Downside risk: Any signs of weakness in the U.S. labor market could lead to a stronger euro against the dollar.
