The EUR/XCD outlook is range-bound as the euro sits near its 90-day average and within a stable 3-month trading range.
Key drivers:
• The European Central Bank (ECB) has maintained a neutral policy, which keeps interest rates steady, contrasting the East Caribbean Central Bank's stable approach.
• Oil prices are currently up, which can support the euro as rising energy costs typically elevate inflation concerns in the Eurozone.
• Projected economic growth in the Caribbean is slowing, as tourism demand is expected to decrease, potentially placing downward pressure on the XCD.
Range: Movement in the EUR/XCD is likely to hold steady within the recent range, as both currencies face similar pressures in their respective economies.
What could change it:
• An increase in eurozone inflation or a shift in ECB policy could boost the euro's value against the XCD.
• A sharper decline in Caribbean tourism or adverse economic news affecting the XCD could lead to a depreciation against the euro.