EUR/USD that has been trapped in ranges that have been narrowing since 2021 will break out and move in a big way, but perhaps not yet.

Traders are currently convinced that the pair breaks higher and have bet big on that eventuality, which has led to an overbought situation.
As a result, some consolidation or correction is likely which could lead the pair back on to very familiar ground between 1.05-1.10.

This does not mean that when the break comes it does not come higher -- it suggests the time isn't right.

The probability of a breakout is growing though, and clearly there is a strong will to bet on one.
A big directional move that ends the period where carry trades are favoured may follow a close beyond either 100-MMA at 1.1221 or 21-MMA at 1.0820 which have helped to shape ranges in the past year.

The consolidation phase that is the foundation for a breakout and a sustained move in one direction has lasted almost two years with annual ranges narrowing substantially from 0.9528-1.1495 in 2022 to 1.1276-1.0448 in 2023 and 1.1173-1.0601 this year.

It has been very quiet, with last year's range the second smallest on record, which suggests that a move following a break that forces a major change in current hedging will be large -- at least toward 1.1750 or parity, but probably beyond.

For more click on FXBUZ