EUR/USD Trapped in Range Due to Central Bank Divergence

The EUR/USD exchange rate remains within a trading range due to the ongoing divergence in monetary policy between the European Central Bank (ECB) and the Federal Reserve.

The ECB has signaled that it will maintain a hawkish policy stance, even as the Fed hints at possible rate cuts later this year. This contrast between the two central banks is supporting the Euro, making it more attractive to investors.

The resulting yield differential has created a floor under EUR/USD, but upside potential remains limited by the relative strength of the US economy and the Fed's cautious approach.