USD/UAH Outlook: The USD/UAH pair is likely to increase, currently trading above its 90-day average and near recent highs, supported by U.S. economic developments.
Key drivers:
• Rate gap: The Federal Reserve's decision to halt rate cuts contrasts with the National Bank of Ukraine’s recent policy rate reduction, highlighting divergence in monetary strategies.
• Risk/commodities: As global uncertainty drives investors towards safer assets, the USD is gaining strength, bolstered by positive U.S. economic reports, which could enhance demand for dollars.
• One macro factor: The European Union's significant financial support for Ukraine is expected to stabilize the UAH but may also limit its appreciation against the USD.
Range: The USD/UAH pair is likely to drift within its recent range as both currencies face external pressures and government policies are adjusted.
What could change it:
• Upside risk: A strong showing in U.S. manufacturing data could further strengthen the USD.
• Downside risk: Heightened geopolitical tensions may lead to a flight to safety, benefiting the UAH if investors seek less exposure to USD.
