EUR/USD: Sideways shuffle and subdued volatility until the May ECB and FOMC meetings – SocGen

EUR/USD logjammed at 1.09. Economists at Société Générale expect the pair to see tedious price action.

Rate cuts in the US later this year would help EUR/USD to move beyond 1.10

“EUR/USD continues to struggle above 1.09 but to the downside we think risks are limited which could be a recipe for sideways shuffle and subdued volatility until the May ECB and FOMC meetings.”

“The 2y US yield must ideally either retrace to 3.64%/3.55% or advance through 4.15%/4.25% to break the tedium in EUR/USD.”

“Rate cuts in the US later this year (not our base case) would help EUR/USD to move beyond 1.10. Conviction of a decisive break remains low, however, and buyers are unlikely to test the upper end of the range until there is greater visibility on where US and Eurozone interest rates peak and whether a recession in the US is forthcoming or not.”