SAR/EUR Outlook:
The SAR/EUR exchange rate is likely to decrease as it currently trades near its 7-day lows and is slightly below its 3-month average. The lack of significant driving factors supports this outlook.
Key drivers:
• Rate gap: The Saudi central bank maintains a fixed exchange rate for the Riyal, while the ECB holds a steady interest rate, providing a contrast in monetary policy approaches.
• Risk/commodities: Oil prices have surged above their average, which often strengthens currencies tied to oil, but this is not currently benefiting the SAR against the EUR.
• Macro factor: Germany's upcoming CPI report could reveal a cooling in inflation, limiting further euro gains.
Range:
Expect the SAR/EUR to hold within its recent trading range of 0.2217 to 0.2302, moving sideways in the short term.
What could change it:
• Upside risk: A significant increase in oil prices could benefit the SAR if it aligns with favorable economic news.
• Downside risk: Poor economic data from the Eurozone could put additional pressure on the SAR/EUR exchange rate.