EUR/AED Outlook:
Slightly positive, but likely to move sideways as the rate is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The European Central Bank has maintained interest rates, while the UAE Dirham’s peg to the US Dollar ensures its stability.
• Risk/commodities: Oil prices are at 7-day highs, which positively impacts the UAE economy and can support the Dirham.
• One macro factor: Eurozone inflation has dropped below the ECB's target, which could prompt future rate cuts.
Range:
EUR/AED is expected to hold within its recent range, with slight fluctuations but no significant movements toward the extremes.
What could change it:
• Upside risk: A surge in Eurozone economic indicators could boost the Euro's attractiveness.
• Downside risk: A significant drop in oil prices could weaken the Dirham's support, affecting the Euro/AED rate.
