USD/UAH Outlook: Slightly positive, but likely to move sideways as the rate is above its recent average and trading near the higher end of its range.
Key drivers:
- Rate gap: The Federal Reserve's pause on rate cuts contrasts with the National Bank of Ukraine's recent reduction in its policy rate, which may weaken the UAH against the USD.
- Risk/commodities: Increased volatility in commodity markets has further bolstered demand for the safe-haven USD during uncertain times.
- One macro factor: The European Union's significant financial support for Ukraine is aimed at stabilizing the economy and can provide some support for the hryvnia.
Range: The USD/UAH is expected to hold within its recent range, possibly drifting near its current levels without significant movement.
What could change it:
- Upside risk: A stronger-than-expected U.S. labor market report could boost the USD.
- Downside risk: A resurgence in geopolitical tensions could increase demand for safer assets, pushing the USD higher.