The eurozone economy doesn’t have much to brag about at the moment. And a rebound in the Chinese economy remains elusive, notes Chris Turner, FX strategist at ING.
Range breaks must be respected
“However, the prospect of the US economy and interest rates converging to lower levels than in the rest of the world is proving supportive for EUR/USD. This can be seen in the FX options market, where on a one-month timeframe, the price of a EUR call option on a EUR put option has turned positive for the first time since February 2022.”
“In our recent FX Talking post, we felt that EUR/USD had the momentum to move to 1.12. We would like to maintain this bias for the time being, although the prospect of European fiscal consolidation and potentially wider sovereign spreads could re-emerge in September.”
“We see support for EUR/USD at 1.0985/1000 and any weaker US activity data could drag it towards 1.11. While it is tempting to say that EUR/USD will remain range-bound between 1.05-1.11 forever, we caution that EUR/USD realized volatility has been exceptionally low over the past few years and range breaks should be respected.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
