Anyone wondering just how subdued FX markets have become lately can make good use of this statistic: EUR/USD is set to record its tightest weekly range since November 2019 at 70pips.
And, that begs the question: What will put an end to the rut?
This week’s inflation data from both the euro zone and U.S. had a minimal impact on central bank rate expectations, partly because rate expectations better reflect policymaker thinking.
Federal Reserve pricing now matches the dot plots and European Central Bank hawks believe rate markets are fairly priced nL2N3FE32D.
Euro zone inflation slightly surprised on the topside, though, the disinflation process remains intact.
That said, services CPI is still a cause for concern, having posted its largely monthly increase since April.
Meanwhile, the firm U.S core PCE print was in line with expectations.
As we look ahead to next week, there are several potential catalysts to spark volatility, including rate decisions from the ECB and Bank of Canada, while Fed Chair Jerome Powell is due to testify before Congress and the latest non-farm payrolls report is also on the docket.
For EUR/USD, given the extremely narrow range, the same parameters apply, with resistance at 1.0880-97, marking the 55-DMA and February peak keeping a lid on gains.
Support at 1.0790-1.0800 puts a limit on pullbacks.
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