EUR/USD Outlook: Slightly positive, but likely to move sideways as the rate is above its recent average, yet lacks a clear driving factor.
Key drivers:
• The European Central Bank is expected to maintain interest rates, providing some support to the euro relative to the US dollar, which may face downward pressure from anticipated rate cuts.
• Oil prices are at near-term highs, contributing to inflation concerns that may pressure the USD as energy costs impact economic performance.
• Ongoing geopolitical tensions, especially surrounding US military actions, are creating uncertainty that negatively affects the US dollar's value.
Range: The EUR/USD is likely to drift within its recent range as neither currency shows strong momentum for significant movement.
What could change it:
• Upside risk could emerge from stronger-than-expected Eurozone economic data, boosting confidence in the euro.
• Downside risk may arise if geopolitical tensions escalate further, leading to increased volatility and a flight to the dollar as a safe haven.
