EUR/XAF Outlook: Slightly positive, but likely to move sideways, given the rate is near its recent average and lacks a clear driver.
Key drivers:
- Rate gap: The European Central Bank has signaled a potential dovish stance, while the Central African authorities have recently tightened their monetary policy to support the XAF.
- Risk/commodities: With oil prices hitting recent highs, this could provide some support to the CFA franc, although the XAF is sensitive to broader economic conditions in its region.
- One macro factor: The recent growth forecast for the CEMAC zone is lower, raising concerns for the XAF's performance going forward.
Range: EUR/XAF is likely to hold within its current range, continuing recent stable trading patterns without significant breakout behavior.
What could change it:
- Upside risk: A stronger-than-expected Eurozone GDP growth report could boost the EUR.
- Downside risk: Increased geopolitical tensions or economic troubles in the CEMAC zone could negatively impact the XAF.