EUR/AUD Outlook:
Likely to decrease, as the pair is below its recent average and near recent lows, amid a decline in Australian consumer confidence.
Key drivers:
• Rate gap: The European Central Bank has maintained interest rates while the Reserve Bank of Australia raised rates, creating a divergence that supports the euro.
• Risk/commodities: Recent increases in oil prices may benefit the Australian dollar if it bolsters local commodity exports, impacting the currency negatively.
• One macro factor: Falling consumer confidence in Australia signals potential economic troubles, adding downward pressure on the AUD.
Range:
EUR/AUD is expected to drift within its recent 3-month range, given the prevailing economic uncertainty.
What could change it:
• An unexpected improvement in Australian economic data could boost the AUD, reversing the trend.
• Further declines in consumer confidence or negative economic indicators could push the EUR/AUD lower.
