EUR/XPF Outlook:
The EUR/XPF exchange rate is likely to increase as it is currently near its 90-day highs and just above its recent average. A supportive factor includes the euro benefiting from stability against a backdrop of resilient oil prices.
Key drivers:
- Rate gap: The European Central Bank's current monetary policy indicates a stable outlook, while the impact of lower interest rates on CPI in New Caledonia keeps the CFP franc under pressure.
- Risk/commodities: Oil prices are at recent highs, showing an upward trajectory which typically supports the euro, as European economies are heavily influenced by energy costs.
- One macro factor: Recent consumer confidence figures in the Eurozone suggest ongoing struggles, but any potential improvement in business activity from upcoming PMI data could enhance the euro's position.
Range:
Expect the EUR/XPF to drift within its recent stable range as it approaches the higher end of the 3-month spectrum.
What could change it:
- Upside risk: A significant rise in private sector growth indicated by positive PMI data could lead to further euro strength.
- Downside risk: Deterioration in consumer confidence or economic forecasts could pressure the euro downward.
