EUR/USD needs a decisive break of the 1.14-1.17 range before a sustained trend can emerge. A thinning option expiry calendar may open that door.

The pair remains trapped between a rising 55-day moving average near 1.1522 and the 100-day moving average at 1.1554, leaving price action compressed and momentum muted. Nearby option-related flows are also contributing to the stalemate, as cash hedging activity around large expiries continues to attract and contain spot.

A cluster of 1.1550 strikes expires on Tuesday, which could modestly ease resistance for bulls. However, additional option interest remains concentrated closer to 1.16 later this week. On the downside, roughly EUR9 billion of expiries are parked near 1.15, with a similar amount around 1.14. These sizable option positions may continue to anchor EUR/USD until they roll off, after which price action could become more directional.

The key question is what catalyst can break the impasse. Low one-week implied volatility suggest the upcoming Fed decision may not generate a lasting move. Mid-month, dip-buying on Tuesday may be a relative-value play against rising global bond yield or the view that a Fed hike may be a one-off event.

ECB speakers this week may reinforce a tightening bias if elevated energy prices persist, though that support could prove temporary. Political risks also linger should pro-EU cohesion weaken.

EUR/USD remains near its April 2025 high of 1.1573 and is testing the upper end of its four-month 1.14-1.17 range. A break above 1.17 or below 1.14 is needed to trigger a sustained move. Until then, range trading remains the preferred strategy.
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(Robert Fullem is a Reuters market analyst. The views expressed are his own.)