USD/EUR Outlook:
Bearish, as the rate is below its recent average and near recent lows, pressured by underperforming US economic data.
Key drivers:
• Rate gap: The Federal Reserve is holding interest rates steady while the ECB maintains its rates, creating a relative advantage for the euro.
• Risk/commodities: Oil prices are rising above average levels, which could strengthen the euro against the dollar due to concerns about inflation impacting the US economy.
• One macro factor: Recent US retail sales figures show stagnation, raising doubts about the strength of consumer spending.
Range:
The USD/EUR rate is likely to drift within its recent range as it remains close to recent lows.
What could change it:
• Upside risk: A positive surprise in upcoming US employment data could boost the USD.
• Downside risk: Continued geopolitical tensions and negative US economic news may further weaken the dollar.