EUR/USD Eyes 1.1100: Will the Range Breakout Occur?

EUR: Looking at 1.1100

EUR: Looking at 1.1100

As discussed above, equity flows may be partially explaining why EUR/USD is drifting higher even though some key inputs are barely moving. The default view will be that EUR/USD is unlikely to break above 1.1100 since the Fed is still hawkish and risk assets have yet to adjust to the much more restrictive monetary policy settings around the world. It is probably dangerous to expect a range break-out, but if it were to occur this week, tomorrow's US June CPI figure would probably be the catalyst.

The eurozone calendar is quite light today – just the July ZEW investor expectations survey at 11CET – and we have the lone ECB speaker of Francois Villeroy de Galhau at 10CET who is unlikely to move the needle much on current market pricing of two more 25bp ECB rate hikes by October.

We have been here before and should not get over-eager on a possible range break-out, but we could see EUR/USD drifting closer to the year's highs near 1.1100.

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Topics

FED eur/usd hawkish risk assets rate hikes market pricing restrictive monetary policy eurozone calendar drifting higher equity flows key inputs range breakout US June CPI July ZEW investor expectations survey ECB speaker Francois Villeroy de Galhau year's highs.