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EUR/USD stuck in tight 1.13s range as options favor protection
Scotiabank notes stable ECB rate expectations and supportive yield spreads are limiting downside, with a key test at resistance near 1.1480 ahead of the 2pm ET FOMC decision.
Scotiabank strategists Shaun Osborne and Eric Theoret said EUR/USD is consolidating within a very tight band in the mid-to-upper 1.13s, with options pricing pointing to demand for protection against euro weakness. They cited steady European Central Bank rate expectations and supportive yield spreads as factors helping curb downside pressure, while increasingly negative risk reversals suggest investors are paying for hedges rather than pressing for further euro declines.
On the technical side, the pair remains bounded by support in the low 1.13s and resistance near 1.1480, with the strategists saying a clear break is needed to establish the next directional move. They also pointed to limited fundamental catalysts so far, including third-tier German import price data that showed signs of a potential peak after an energy driven surge, while near-term risk is centered on US developments ahead of the 2pm ET FOMC rate decision, according to FXStreet.
Latest closeEUR/USD 1.139 ▼0.1%