EUR/USD Rangebound as Volatility Hits Lows

EUR/USD has been rangebound against the US Dollar due to low volatility, according to Chris Turner at ING. The one-year realised volatility of EUR/USD has decreased to 5.8%, matching lows from November 2024. Turner believes this calm environment is unlikely to change before mid-September, when central bankers return from their summer breaks.

Turner also warns that European investors in US assets may need to increase their Dollar hedge ratios if the Dollar weakens. This is because many of these investors are currently underhedged, and a sudden shift in market sentiment could leave them exposed.