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Apr 08 - 06:55 PM

SocGen: EUR/USD Remains Stuck in a Claustrophobic Range

By eFXdata  —  Apr 08 - 03:00 PM


Société Générale discusses the recent dynamics of EUR/USD, which has been confined within a narrow trading range despite a series of US economic data releases and shifting expectations for Federal Reserve policy actions. The focus shifts to this week's US inflation data, which may influence market expectations regarding the timing of the Fed's next moves.

Key Points:

  • US Economic Data Overview: Last week's data showed a mixed picture with stronger US manufacturing ISM figures, softer services data, and robust payroll numbers. This week, the spotlight is on US inflation figures, with core CPI anticipated to show a monthly gain of 0.3% and a year-on-year increase of 3.7%.
  • Fed Rate Cut Speculations: Recent data have slightly dampened expectations for a June rate cut, with market sentiment now leaning towards a July reduction. This adjustment in expectations supports the dollar to some extent but not enough to break EUR/USD out of its current range.
  • ECB's June Focus: The European Central Bank's policy expectations are centered around a potential rate cut in June, adding another layer of complexity to EUR/USD dynamics.
  • EUR/USD Trading Dynamics: The currency pair remains in a "claustrophobic range," with the dollar's strength in real terms implying that positive economic surprises might have a more muted impact on lifting it compared to the potential downside from weaker data.


EUR/USD is currently caught in a tight trading range, influenced by a mix of US economic data releases and evolving expectations for Federal Reserve and European Central Bank policy moves. The upcoming US inflation data will be closely watched for its potential to sway market sentiment regarding the Fed's future actions. While the dollar receives some support from shifting rate cut expectations, the balance of data suggests EUR/USD may continue to oscillate within its current narrow band for the time being.

Société Générale Research/Market Commentary


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