UOB’s Quek Ser Leang and Lee Sue Ann kept a neutral near-term stance on EUR/USD, expecting range trading between 1.1590 and 1.1685 after the pair briefly dipped to 1.1606. Over the past session, it moved within 1.1613 to 1.1655 and ended 0.01% higher at 1.1631, though the strategists flagged a tentative pick-up in downside momentum. They see room for a retest of 1.1605, while judging 1.1590 as unlikely to be challenged in the immediate horizon; a push above 1.1645 would instead point back to sideways trade.
For the one- to three-week view, they reiterated a framework first set out on 25 May when spot was 1.1620: EUR/USD is neutral and may continue to oscillate between 1.1590 and 1.1685. However, they said the recent rise in short-term downside momentum has raised the risk of a break below 1.1590. Separately, a move beneath the 1.1540 trendline would, on their analysis, open the way towards 1.1410 over the coming months. The piece was produced with the help of an AI tool and reviewed by an editor.
Market Outlook and Influencing Factors
We see the EUR/USD pair as being stuck in a neutral range for the next few weeks, likely trading between 1.1590 and 1.1685. However, there is a gentle build-up in downward pressure that we cannot ignore. The immediate focus is on the 1.1605 support level.
This mild bearish view is reinforced by recent economic data. The latest Eurozone flash CPI for May 2026 came in at 2.3%, slightly below expectations and down from the previous month, reducing pressure on the European Central Bank to be aggressive. All eyes are now on the U.S. Non-Farm Payrolls report due this Friday, with forecasts anticipating a strong 210,000 jobs added, which would likely strengthen the dollar.
Trading Strategies and Risk Levels
Given this setup, we are looking at strategies that profit from a small decline or sideways movement. A bear put spread, such as buying a 1.1625 put and selling a 1.1590 put, offers a defined-risk way to position for a test of the range’s lower bound. This approach benefits from the downward drift while capping potential losses.
Alternatively, since implied volatility is sitting near multi-month lows around 6.5 on the CVIX index, selling premium is an attractive option. We believe selling a bear call spread with a short strike around 1.1650 provides a good way to collect income. This position profits if the pair moves down, sideways, or even slightly up, as long as it stays below our strike price by expiration.
We must remain vigilant for a break below the 1.1590 support, as that could signal a more serious downturn. A close below the 1.1540 trendline in the coming weeks would open up the possibility of a much larger move down toward the 1.1410 area. We saw a similar consolidative price action in late 2023 that ultimately resolved with a sharp downside break following key U.S. data releases.
