EUR/XPF Outlook:
The EUR/XPF is likely to move sideways as it trades near the 90-day average and within a tight range. Although the euro is at recent highs, current geopolitical tensions and high energy prices create uncertainty.
Key drivers:
• Rate gap: The European Central Bank is facing challenges with inflation and growth, which may affect EUR strength compared to the CFP Franc's stability.
• Risk/commodities: Rising oil prices are above average and impact the euro negatively, leading to higher inflation and economic risks in the Eurozone.
• One macro factor: Eurozone unemployment is holding at a record low, which may support EUR later, but geopolitical factors still weigh heavily.
Range:
The EUR/XPF is expected to hold steady, given that it has recently traded in a narrow range.
What could change it:
• Upside risk: A de-escalation in geopolitical tensions could boost confidence in the euro.
• Downside risk: Continued volatility in energy markets may further pressure the euro.
