EUR/USD continues to grind higher without much news. At the heart of the story is whether EUR/USD will break out of an 18-month trading range, which has largely contained EUR/USD between 1.05 and 1.11, ING’s FX strategist Chris Turner notes.
The bias is with the upside
“The FX options market suggests that – at least over the next month – the bias is with the upside. The one-month risk reversal – the price of a EUR/USD call option over an equivalent put option – is moving deeper in favour of euro calls. This is happening when implied volatility is rising, suggesting active buying of euro call options.”
“The eurozone calendar remains very light today and does not pick up until Thursday’s PMI releases. However, we do get to see the eurozone monthly (June) current account data today. This is now running close to a €30bn surplus per month compared to the €30bn monthly deficits seen in 2022 – and a big driver of EUR/USD weakness that year.”
“On that subject, lower oil prices on the back of a potential Middle East peace deal are good news for EUR/USD. 1.1040/1050 should prove intra-day support for EUR/USD and we see the 1.1110/1140 as big medium-term resistance – a break of which would be big news.”
