EUR/USD Range-Bound with Upside Bias: ING Warns of Breakout Risk

The EUR/USD currency pair is expected to remain range-bound in the near term, according to ING analysts. The pair has been testing the upper bounds of its recent trading band, with market participants weighing divergent monetary policy expectations between the European Central Bank and the Federal Reserve.

ING notes that the euro's resilience stems from a combination of factors, including better-than-expected eurozone economic data and a softening of US economic momentum. The market has already priced in aggressive Fed rate cuts, while the ECB's policy path appears less dovish than previously anticipated.

The technical indicators also support the range-bound view, with the pair repeatedly finding support around the lower end of its recent consolidation zone. However, ING cautions that a breakout above the range's upper boundary would require a fresh catalyst, such as significant shift in US inflation data or a surprise ECB policy signal.