EUR/XOF Outlook:
The EUR/XOF pair is likely to increase as it currently trades at 90-day highs, supported by positive developments in eurozone economic indicators.
Key drivers:
- Rate gap: The European Central Bank has a more aggressive stance on inflation compared to the Bank of Central African States, which helps strengthen the euro against the CFA franc.
- Risk/commodities: The recent rise in oil prices, trading significantly above its three-month average, can support the euro due to its impact on economic recovery in Europe.
- One macro factor: Germany's improving economic sentiment could bolster confidence in the euro, leading to further gains.
Range:
The EUR/XOF is likely to continue holding within its recent stable range, testing near-term resistance levels as investor interest grows.
What could change it:
- Upside risk: A significant improvement in industrial data from the Eurozone could push the euro higher.
- Downside risk: Any negative developments regarding the proposed CFA franc reforms could undermine the CFA franc’s position.