Bias: The outlook for EUR/USD is range-bound, as the pair is currently below the 90-day average and in the lower half of the 3-month range.
Key drivers:
• Rate gap: The European Central Bank (ECB) appears to maintain a neutral policy stance, while the Federal Reserve might signal plans for rate cuts, which supports USD strength.
• Risk/commodities: Recent oil prices are above their average, which can negatively affect the euro as energy costs are significant for Eurozone economies.
• One macro factor: A contraction in Germany's exports points to economic challenges in the Eurozone, limiting the euro's potential for recovery.
Range: EUR/USD is likely to hold within its recent range, suggesting limited movement in the near term as the euro faces downward pressure.
What could change it:
• Upside risk: A significant improvement in Eurozone economic data could bolster the euro.
• Downside risk: Continued declines in Eurozone economic performance or aggressive USD policy shifts could weaken the euro further.
