EUR/XAF Outlook: Slightly positive, but likely to move sideways, as the rate remains around its 90-day average and lacks a clear driving force.
Key drivers:
- The European Central Bank maintains a stable monetary policy, while the Bank of Central African States has raised rates to combat declining reserves, creating divergence in monetary stances.
- Oil prices are currently above their recent average, benefiting the euro's appeal, as it reflects ongoing economic recovery in the Eurozone.
- Concerns over fiscal sustainability in Cameroon due to a significant budget deficit could negatively impact the XAF's stability.
Range: The EUR/XAF is likely to drift within its recent 3-month range as factors impacting both currencies are mixed.
What could change it:
- Upside risk: A stronger-than-expected economic report from Germany could boost the euro's appeal.
- Downside risk: Continued concerns regarding Cameroon’s fiscal situation could exert downward pressure on the XAF, affecting the exchange rate.