EUR/USD remains glued to the 1.1700 area. Three-month traded volatility has dropped to its lowest level since last November, at 6.60%, ING's FX analyst Chris Turner notes.

Market struggles to price another 25bp cut in this cycle

"Interestingly, the three-month risk reversal skew in the EUR/USD FX options market remains at 0.5% in favour of euro calls. So, it's not as though investors have given up on the EUR/USD upside; it's more that they think there will be less volatility in general. It's hard to see EUR/USD moving out of a 1.1700-1750 range today. "

"As above, lower energy prices are good news for the euro. The euro's terms of trade (export less import prices) are towards the higher levels of the year as both crude oil and natural gas prices soften. This will help the euro's valuation metrics."

"For today, there's little eurozone data of note, but we do hear from ECB speakers. The ECB script at the moment remains one of the 2.00% deposit rate being at a good place, but that the central bank would not hesitate to act if needed. That threat to act probably means one further rate cut should inflation undershoot at a time of weak activity. However, the market struggles to price another 25bp cut in this cycle."