Weekly forecast for the Euro/Saudi Riyal pair EUR/SAR


Weekly forecast for the Euro/Saudi Riyal pair EUR/SAR

After two weeks in a row, the exchange rate of the euro against the Saudi riyal EUR/SAR tried to rebound higher, but its gains did not exceed the resistance level of 4.08 Saudi riyals per euro. It returned to its broader downward path during trading in the last week of February, and with the start of trading in March, it declined towards the level of 4.04 riyals per euro. Returning to the technical analyzes and expectations for the price of the euro against the Saudi riyal EUR/SAR, I repeatedly mentioned that the downward path will remain strong, as the Saudi riyal remains the strongest against the rest of the other major currencies, as the Saudi economy is still the best compared to the 20 largest economies around the world.

I still adhere to the expectations that the general trend of the euro currency pair against the Saudi riyal EUR/SAR will remain bearish, and breaking the psychological support of 4.00 riyals will give the bears the momentum to move further downward, and the next most important support levels, depending on the performance on the daily chart, will be below 3.97 and 3.85 riyals per euro. On the other hand, over the same period of time, the resistance levels will remain at 4.10 riyals and 4.15 riyals, which are the most important for causing a real shift in the general trend to the upside.

On the economic side, according to the Economic Calendar data... the most important event is likely to attract the attention of markets and investors this week, the European Central Bank policy meeting and the US non-farm payrolls report, the greatest amount of attention. The ECB is expected to keep all policy settings unchanged but may hint at when interest rate cuts are expected to begin. Financial markets are pricing in the ECB's first 25 basis point interest rate cut at the June meeting and it will be interesting to see whether ECB President Lagarde, or any of the other voting members of the ECB, will oppose this.

According to Nordea Bank, there will be more resistance to any cut in interest rates in the near term. “This week's ECB meeting is likely to include another round of bearish inflation expectations, but given the ECB's willingness to wait for more labor market data, the key message is set to point to a baseline for the first cut in the summer.”

Last week, data from the statistics agency Eurostat showed that core inflation in the euro zone fell for the seventh month in a row, but it contradicted expectations for a greater decline. Core inflation in the European Union is now at its lowest level in two years. Overall, the release of the statement did little to change interest rate expectations. Markets continue to expect cuts of around 90 basis points this year – three or four cuts of 25 basis points – with the June 6 meeting the most likely starting point. The cut at this meeting means that the ECB is the first major central bank to cut interest rates, leaving the euro price at risk of further decline.

Euro against the Saudi riyal chart

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