EUR/USD Outlook: The outlook for EUR/USD is bullish, as the rate is currently above its recent average and near recent highs, supported by strong economic indicators.
Key drivers:
• The European Central Bank is expected to maintain a neutral monetary policy, which keeps the euro stable against the dollar while the Federal Reserve plans rate cuts, making USD less attractive.
• Oil prices have risen significantly, impacting the economic outlook and providing indirect support to the euro, as higher oil prices often affect trade balances and inflation.
• Eurozone inflation is projected to decrease, suggesting a stable economic environment that could bolster the euro's position.
Range: The EUR/USD is likely to drift within its recent 3-month range, maintaining stability unless affected by significant external factors.
What could change it:
• Upside risk: A sudden geopolitical resolution or stronger-than-expected economic data from the Eurozone could boost the euro further.
• Downside risk: Renewed USD strength due to unexpectedly strong inflation readings could pressure the pair downwards.
