EUR/USD Trapped in Choppy Range Due to Diverging Central Banks

Rabobank expects EUR/USD to remain in a choppy range due to diverging monetary policy paths between the Federal Reserve and the European Central Bank.

The contrasting policy stances of the Fed and the ECB are the primary factor behind Rabobank's range-bound view, with the euro finding support from resilient Eurozone economic data and a less hawkish Fed than previously expected.

Rabobank analysts point to a lack of clear catalysts that would push the pair decisively in one direction, with market positioning not being extreme. The bank notes that a breakout from this range would require a significant shift in economic data or central bank communication.