EUR/USD inter-markets: rangebound near-term

EUR/USD keeps navigating the lower bound of the recent range, although it so far manages to post moderate gains in the mid-1.1000s but still below the key 200-day sma, today located at 1.1086.

The Turkish events over the weekend threatened to spark a fresh wave of risk aversion, although that soon morphed into a short-lived dip in the risk-associated space early in the Asian session, just to give way to a renewed sentiment towards the riskier assets soon afterwards.

In the meantime, spot trades on a firm footing around 1.1050 amidst yields in the German and US money markets meandering a ‘sea of red’ and the USD Index hovering over Friday’s close.

Additionally, volatility tracked by VIX keeps levels around the middle of the range, somewhat signalling the lack of bias in the global sentiment.

Against the current backdrop and with market participants expecting further catalysts, the pair’s price action will likely hinge on the broader risk trends and USD-dynamics, specially after recent positive results from the US docket and with the likelihood of a rate hike by the Fed slowly gathering traction. Furthermore, CME Group’s FedWatch tool now sees the probability of a rate hike in September at nearly 40% and almost 13% in September, from marginal levels a couple of weeks ago.