Bias: EUR/USD is range-bound, trading near the 90-day average and in the middle of its three-month range, with limited immediate shifts as traders await fresh data for direction and volumes remain light in holiday markets.
Key drivers:
- Rate gap: ECB policy stays neutral with steady rates, while the Fed is seen cutting toward a neutral stance this year, narrowing the policy gap.
- Risk/commodities: Oil is near multi-week highs, above its three-month average, and volatility remains elevated; higher oil tends to support the dollar and cap euro gains.
- One macro factor: US payrolls and unemployment data due soon could shift Fed easing expectations, influencing the dollar.
Range: Expect EUR/USD to drift within the three-month range, with little conviction unless new data sparks a move, and with volumes light during thin liquidity today.
What could change it:
- Upside risk: Dovish Fed tilt or softer US data could push EUR/USD higher.
- Downside risk: Strong US data or hawkish Fed commentary could keep the dollar firm and EUR/USD lower.
