EUR/WST Outlook:
Slightly weaker, but likely to move sideways as the rate is below its recent average and lacks a clear driver.
Key drivers:
• Rate gap: The European Central Bank has maintained interest rates, potentially limiting euro strength against the Tālā.
• Risk/commodities: Rising oil prices may influence inflation in the Eurozone, adding pressure on the euro.
• One macro factor: Eurozone inflation has fallen below the ECB's target, raising concerns about future rate cuts.
Range:
The EUR/WST is likely to move within its recent 3-month range, with stable conditions expected due to limited volatility.
What could change it:
• Upside risk: An unexpected rise in eurozone growth or inflation could support the euro.
• Downside risk: Further declines in Eurozone inflation may lead to increased speculation about ECB rate cuts.