The EUR/USD exchange rate has struggled to rise above 1.180. Even with recent negative news from the US, there’s little motivation to sell dollars, and the euro doesn’t have a strong story to encourage growth. Current exchange levels may stay the same, with the possibility of an upward shift due to concerns about a potential US government shutdown and cautious Federal Reserve minutes. In the near term, the exchange rate is likely to remain between 1.168 and 1.176.

Focus on Eurozone This Week

This week, there won’t be much eurozone data to consider, as attention will be on speeches from European Central Bank (ECB) officials. President Christine Lagarde’s speech is expected, but recent inflation data indicates that ECB rate policies are not likely to change. The EUR/USD pair is having difficulty breaking above the 1.180 level. Despite disappointing US news, such as last Friday’s weak jobs report showing only 95,000 new jobs in September, there’s no strong push to sell the dollar. The euro’s story isn’t compelling enough to drive it higher. Given this lack of movement, traders should look for strategies that take advantage of low volatility in the coming weeks. Selling out-of-the-money puts and calls could be a viable tactic, as implied volatility for this pair has dropped to its lowest since August. There is a good chance the pair will stay within the 1.168-1.176 range.

Risks Linked to US Events

The biggest risks are related to US events, particularly the ongoing standoff in Washington about a government shutdown and the upcoming Federal Reserve minutes. Historically, during shutdowns like those in 2013 and 2018, the dollar often experiences short-term weakness but rarely faces long-term declines due to these events alone. We expect the Fed minutes to show a more cautious approach, but this may already be reflected in the market. Locally, not much is expected to influence the market. Recent inflation numbers for the Eurozone in September were stable at 2.1%, confirming that the ECB is satisfied with its current interest rate policy. We do not anticipate any new information from ECB President Lagarde that would alter this view. Create your live VT Markets account and start trading now.

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