June 3 (Reuters) - Those prepared to short EUR/USD to bank the guaranteed returns that result from the difference between U.S. and eurozone interest rates may be rewarded.

The surge from 1.1125-1.1573 has certainly provided better levels to sell. With the pair stalled between 1.10-1.15 for many weeks and volatility dropping, interest rates should have more influence.

The interest rate divide, which is roughly 2% in favour of the dollar, is expected to be maintained throughout the next year. While that mattered less when EUR/USD was flying higher, it matters more now that the significant movement for the pair appears to be over.

The other key factor favouring carry trades is the robust state of risk appetite reflected by equity markets, which will support speculation or investing.

The quieting in currency markets should encourage a flow of cash away from currencies undermined by lower and falling interest rates, like the euro, toward those with higher yields.

Although the dollar is not the most attractive asset in terms of interest rates, it is the most liquid, and it is therefore much easier to hedge EUR/USD than any other currency pair. That makes a relatively low-bearing carry trade a lot more attractive.
EUR/USD, volatility, int rates expressed as 1-year EUR swap and stocks

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)