EUR/USD Trapped Near 1.14 Ahead of Fed Decision

The EUR/USD exchange rate has been trading within an unusually narrow range of 1.1350 to 1.1420, with markets waiting for the Federal Reserve's policy decision.

Scotiabank analysts have noted a 'somewhat worrisome development' in the options market, where risk reversals are pushing deeper into negative territory and approaching their late-June lows.

This indicates a growing premium for protection against Euro weakness, suggesting investors are paying more to hedge against a decline even though the spot rate remains stable.

ING, on the other hand, sees scope for EUR/USD to revisit 1.15 after the Fed decision and expects a potential route higher if markets retain a broadly constructive view on Middle East de-escalation.