USD/UAH Outlook: The outlook for USD/UAH is slightly positive, but likely to move sideways, as the rate is above its recent average while lacking clear upward momentum.
Key drivers:
- Rate gap: The Federal Reserve's potential interest rate cuts while the National Bank of Ukraine maintains a high policy rate to combat inflation creates a widening differential that often supports the UAH.
- Risk/commodities: With recent volatility in oil prices, weigh down on the USD, making it less attractive among global investors.
- One macro factor: International financial support from the EU strengthens perceptions of economic stability for Ukraine, bolstering the UAH against the USD.
Range: USD/UAH is expected to drift within its recent range, reflecting modest fluctuations without testing extremes.
What could change it:
- Upside risk: A sudden disruption in geopolitical tensions could boost demand for the USD.
- Downside risk: A decision by the Federal Reserve to cut rates more aggressively than anticipated could pressure USD lower against the UAH.
