The market bias for the EUR to XPF exchange rate remains range-bound. The recent trend shows the euro holding steady at its three-month average of 119.3.
Key drivers include the interest rate differential, with the European Central Bank (ECB) warning that a stronger euro could dampen inflation. This cautious outlook may lead to a tempered euro performance. The economic growth forecast for the Eurozone is positive, with GDP growth projected at 1.6% in 2026, driven by fiscal measures in Germany and military spending increases. Furthermore, the fixed peg of the CFP franc to the euro adds a layer of stability, contributing to a steadier exchange rate.
In the near term, the exchange rate is likely to remain within its current range. However, an upside risk arises from improving consumer sentiment in Germany, while a downside risk could stem from geopolitical tensions affecting broader market sentiment. Increased caution regarding global economic stability may also impact euro performance against the XPF.