EUR/USD Trapped Within Narrow Range as ECB Hike Odds Reach 87%

The EUR/USD pair traded slightly higher on Friday, reaching 1.1550 against the dollar during the European session. The 100-day simple moving average at 1.1567 continues to cap every breakout attempt by the euro.

Money markets have priced in a nearly 87% chance of an ECB hike to 2.50% on September 10, which is likely contributing to the pair's lackluster reaction to US retail sales data that fell 0.6% in July. The decline in sales had initially sparked a brief rally in the euro, but it was unable to break above 1.1600.

The EUR/USD pair has been trading within a narrow range of 1.1500-1.1582 for nearly two weeks, absorbing multiple tier-one US data releases and a confirmed eurozone GDP print without producing any significant directional breaks. The absence of a marginal buyer is evident in the compressed volatility across FX markets.

The technical framing of the pair shows that it holds above the cluster of underlying support with a mildly constructive bias on the daily chart, but sits inside a descending channel with the upper boundary near 1.1560 and the lower boundary around 1.1350 on the 4-hour chart.