AUD/EUR Outlook:
The outlook for AUD/EUR is likely to increase, as the rate is currently above its recent average and near recent highs.
Key drivers:
• Rate gap: The Reserve Bank of Australia has recently raised interest rates, creating a favorable environment for the AUD compared to the European Central Bank’s steady rates.
• Risk/commodities: Current oil prices are at recent highs, which can support the Australian dollar given the nation’s significant commodity exports.
• Macro factor: Australia's Consumer Price Index has increased, leading to expectations for further monetary tightening by the RBA.
Range:
Movement is expected to test the upper end of the recent range due to current supportive factors for the Australian dollar.
What could change it:
• Upside risk: A strong recovery in consumer confidence in Australia could bolster the AUD further.
• Downside risk: A slowdown in commodity prices or negative economic data from Australia could pressure the AUD.