The EUR/USD market is currently range-bound.
Key drivers include interest rate expectations, with the Federal Reserve anticipated to implement rate cuts by mid-2026, which may weaken the USD. The European Central Bank's flexible approach to monetary policy supports the euro amid improving Eurozone economic growth projections. Additionally, elevated geopolitical tensions, particularly linked to the Ukraine conflict, continue to affect the euro's stability.
Over the next few months, the EUR/USD pair is expected to trade within a stable range. Recent trading activity shows the euro around 1.1657, close to its three-month average and fluctuating within a narrow band.
An upside risk for the euro could arise from stronger-than-expected economic data supporting growth, while downside risk may come from further depreciation of the USD influenced by the Fed's monetary easing. Additionally, shifts in oil prices can affect overall market sentiment, with current trends indicating volatility that could impact both currencies.