SAR/EUR Outlook:
Slightly weaker, but likely to move sideways, as it trades below its recent average and lacks a clear driver.
Key drivers:
• Rate gap: The Saudi Central Bank's fixed rate policy supports the riyal's stability, while the European Central Bank's decisions may impact the euro negatively due to low inflation pressures.
• Risk/commodities: Oil prices are currently above their average but show high volatility, which could add considerable pressure on the euro as it affects overall economic stability in the Eurozone.
• One macro factor: Ongoing geopolitical tensions related to the Russia-Ukraine conflict continue to weigh on the euro, creating uncertainty in the market.
Range:
The SAR/EUR exchange rate is likely to test recent peaks, staying within the stable range observed over the past three months.
What could change it:
• Upside risk: Strengthening oil prices could reassure euro investors and lower the perception of geopolitical risks.
• Downside risk: A significant escalation in the Russia-Ukraine conflict could further diminish confidence in the euro.