EUR/XCD Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The European Central Bank is expected to maintain interest rates, while the fixed peg to the US dollar helps keep the East Caribbean Dollar stable.
• Risk/commodities: Oil prices are currently at 90-day highs, which could support the euro as higher energy costs might impact the Eurozone's inflation outlook.
• One macro factor: Recent positive economic reports from the Eurozone, including a high economic sentiment index, suggest a resilient economic environment.
Range: The EUR/XCD is likely to drift within its recent range, as volatility is limited.
What could change it:
• Upside risk: A more hawkish shift from the European Central Bank could boost the euro.
• Downside risk: A downturn in Eurozone growth or heightened geopolitical tensions could weigh on the euro's value.