EUR/XOF Outlook: Slightly positive, but likely to move sideways as the rate is near its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The European Central Bank's cautious policy contrasts with the Bank of Central African States' firm stance on the CFA franc, supporting stability.
• Risk/commodities: Oil prices are currently above average, which may contribute to higher costs in the Eurozone and could influence the euro.
• One macro factor: The recent GDP growth in the Eurozone indicates a steady economic expansion, which may provide some support for the euro.
Range: The EUR/XOF is expected to test extremes within its recent range, reflecting the mixed signals in the market.
What could change it:
• Upside risk: A significant improvement in upcoming German retail sales data could strengthen the euro further.
• Downside risk: Renewed geopolitical tensions or economic setbacks in the Eurozone could lead to declines in the euro’s value.