EUR/SAR Outlook:
Slightly positive, but likely to move sideways, as the rate is above its recent average without a clear driving force.
Key drivers:
• Rate gap: The European Central Bank's decision to maintain interest rates contributes to the EUR's relative strength against the SAR, which is pegged and stable.
• Risk/commodities: Oil prices are currently at seven-day highs and significantly above their three-month average, potentially supporting the SAR as Saudi Arabia’s economy is oil-driven.
• One macro factor: Recent Eurozone inflation data fell below the ECB’s target, casting doubt on future interest rate hikes, which may limit the EUR's upward momentum.
Range:
The EUR/SAR is likely to hold within its recent stable range as there are no strong directional influences.
What could change it:
• Upside risk: A rise in oil prices beyond their recent highs could strengthen the SAR, boosting the EUR/SAR rate.
• Downside risk: Indicators of weakening European growth could prompt a reevaluation of the EUR's strength.
