Kit Juckes at Societe Generale highlights that recent G10 central bank actions have not sparked major FX moves, with EUR/USD still range-bound. He notes deeper Eurozone GDP forecast cuts versus other regions. The bank expects EUR/USD to drift toward 1.12 over time rather than 1.20, but sees a need for a fresh catalyst to break the current range.

Euro pressured by weaker growth outlook

"However, the last week has seen three G10 central banks leave rates on hold (RBA, Bank of Canada and Riksbank) while two have hiked rates (BOJ and ECB). The two hikers are both mid-table in the G10 FX rankings over the last week, which doesn’t suggest fireworks are likely, though the arrival of Chair Warsh may change the odds on that a bit and the Eurozone has seen deeper cuts to 2026/27 GDP forecasts than anywhere else since the conflict started."

"Short USD/JPY and short USD/SEK should deliver results in the event of a dovish outcome; further EUR weakness would follow on from any hawkish surprises."

"Either way, we expect EUR/USD to head towards 1.12 over time, rather than 1.20, but are resigned to waiting for a catalyst to emerge, that can replace current range-trading with a clear trend."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)