EUR/XAF Outlook:
The outlook for EUR/XAF is slightly positive, but likely to move sideways as the rate is near its 90-day average and trading within a tight range.
Key drivers:
• Rate gap: The European Central Bank has kept interest rates steady, while the Bank of Central African States has recently increased rates, supporting XAF's stability.
• Risk/commodities: Oil prices are currently elevated, trading significantly above their recent average, which may influence the economic outlook for the Central African region, impacting XAF.
• One macro factor: The Central African region is facing a slight economic growth slowdown forecasted for 2026, primarily due to a contraction in the oil sector.
Range:
EUR/XAF is expected to hold within its current trading range, as it has exhibited stable movements in recent sessions.
What could change it:
• Upside risk: A stronger-than-expected economic recovery in the Eurozone could boost the euro's demand.
• Downside risk: Renewed concerns about the geopolitical situation or financial instability in the Central African region could weigh on XAF.