DBS Group Research’s Philip Wee notes that the Euro (EUR) remains trapped in a range against the US Dollar (USD) as markets focus on the June FOMC and ECB meetings. The European Central Bank is expected to deliver a 25 bps ‘insurance’ hike and upgrade its inflation outlook. EUR/USD has been consolidating between 1.14 and 1.18 after Operation Epic Fury, while DXY must break its recent range to test resistance.

Euro holds range as ECB recalibrates

"The European Central Bank is expected to deliver an insurance hike to counteract inflation driven by energy shocks."

"Look for the deposit facility rate to increase by 25 bps to 2.25% at its June 11 meeting and the ECB to revise up its inflation outlook."

"After hitting the year’s peak of 1.2081 in late January, EUR/USD has been consolidating in a 1.14-1.18 range after Operation Epic Fury started."

"The DXY still needs to break below last month’s 98.9-95.0 range to [EUR/USD] test the 1.18 resistance level."

"As the Fed navigates its internal transitions, other major central banks are facing their own tactical dilemmas."

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