EUR/XOF Outlook: Slightly positive, but likely to move sideways, as the pair is steady at its 3-month average and lacks a clear driver.
Key drivers:
• Rate gap: The European Central Bank's neutral monetary policy is contrasting with the Bank of Central African States' recent rate hike, supporting the XOF.
• Risk/commodities: Oil prices are up, which could strengthen the EUR as the Eurozone imports oil, potentially aiding the currency.
• One macro factor: Bulgaria's adoption of the euro may enhance interest in the EUR as it increases the Eurozone's economic footprint.
Range: The EUR/XOF is expected to hold steady around the recent average, with possible slight upward or downward movements based on external factors.
What could change it:
• Upside risk: A stronger-than-expected Eurozone economic growth forecast could increase EUR demand.
• Downside risk: Continued geopolitical tensions impacting oil prices or regional stability in West Africa could weaken the XOF.