EUR/USD Outlook:
EUR/USD is likely to decrease as it is currently trading near 30-day lows and significantly below its 3-month average. Ongoing risk aversion and the US dollar's strength amid global conflict are key factors.
Key drivers:
• Rate gap: The Federal Reserve's monetary policy remains hawkish compared to the European Central Bank, supporting the USD.
• Risk/commodities: The surging oil prices are adding upward pressure on the USD, showcasing the dollar's safe-haven status amidst volatility.
• Macro factor: The Eurozone's low unemployment rate may provide some support for the euro, but it’s not enough to counter the current dollar momentum.
Range:
EUR/USD is expected to test the lower end of its recent 3-month range, reflecting downward pressure.
What could change it:
• Upside risk: A significant decline in US economic data could weaken the dollar.
• Downside risk: Escalation in geopolitical tensions may bolster the USD further, enhancing its appeal as a safe haven.