ING’s Chris Turner highlights that EUR/USD three‑month implied volatility trades well below realised and near the lower end of its five‑year range, pointing to a range‑bound environment. With slightly greater upside risks to Oil prices, ING sees EUR/USD drifting lower in coming sessions but expects strong buying interest around 1.1650, while upcoming Eurozone Gross Domestic Product (GDP) and European Central Bank (ECB) speeches could shape expectations for a June rate hike.

Range-bound pair with downside risks

"EUR/USD three-month traded volatility is now 5.7%. That is more than 1% below realised volatility and not far from the 5.2/5.3% lower end of the range for traded volatility seen over the last five years. That does not mean that a new trend cannot occur, but when looking at the relatively flat risk reversal (the price of a euro call over an equivalent euro put), the conclusion is more range-bound EUR/USD trading."

"Given that we see slightly greater upside risks to oil prices from current levels, EUR/USD could come a little lower over the coming sessions. However, good demand should be found once again at 1.1650. On the calendar today is the second release of 1Q26 eurozone GDP – expected at 0.1% QoQ – and a few ECB speakers."

"The big speeches from Christine Lagarde and Philip Lane do not come until this evening, however. Expect them to hold out the prospect of an ECB rate hike in June, otherwise the euro will get hit."

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