One way or the other, EUR/USD needs a spark.
It is weakening slightly after euro zone February Sentix index and the December PPI monthly rate missed to the downside, which reminded traders of slowing EZ growth. Still, an extended move lower -- or higher -- is unlikely in the face of counter balancing risks and lack of new catalysts. On the one hand, slowing euro zone growth has pushed back expectations for the ECB's initial hike into 2020, keeping euro upside limited, while the Fed's dovish stance last week has eurodollar and fed funds markets showing no U.S. hikes for 2019 and rates cuts possible in 2020.
Thus, the U.S. short-term rate market limits enthusiasm for the greenback.
With the ECB and Fed now taking similar cautious stances EUR/USD is unlikely to see volatile moves.
Options market reflect that view and suggest the broad 1.1200-1.1600 range is set to hold nL1N1ZZ05H.
Traders will need a catalyst to break the range.
Should U.S. data drastically weaken, euro zone growth picks up or U.S.-Sino trade talks result in a deal EUR/USD's upside is vulnerable and a run toward the 1.1850 area could be due.
chart: Click here