USD/XPF Outlook:
The outlook for USD/XPF is slightly positive, but likely to move sideways as it is trading above its recent average and is stable within the 3-month range.
Key drivers:
• Rate gap: The US Federal Reserve’s hawkish stance supports a stronger USD compared to the monetary policy of the Banque de France for XPF.
• Risk/commodities: The surge in oil prices due to geopolitical fears boosts demand for USD since oil is priced in USD, impacting XPF negatively.
• One macro factor: Events analyzing economic stability in fragile regions may introduce uncertainty affecting the XPF.
Range:
Expect USD/XPF to hold within its recent range of approximately 99.11 to 103.0.
What could change it:
• Upside risk: Escalation in geopolitical conflicts could lead to heightened safe-haven demand for USD.
• Downside risk: Improved economic outlook in the Pacific region could support the XPF and weaken demand for USD.
