ING’s Chris Turner reports that EUR/USD three-month implied volatility is currently at 5.7%, which is more than 1% below realised volatility and close to the lower end of its five-year range at 5.2/5.3% [1]. This suggests a range-bound trading environment for the currency pair, with risk reversals remaining relatively flat, indicating no strong directional bias [1]. Turner notes that while there are slightly greater upside risks to oil prices, EUR/USD could drift lower in the coming sessions, but expects strong buying interest to emerge around the 1.1650 level [1].
On the macroeconomic front, the second release of Q1 2026 eurozone GDP is expected at 0.1% quarter-on-quarter, which could influence market sentiment [1]. Additionally, several European Central Bank (ECB) speeches are scheduled, with major addresses from Christine Lagarde and Philip Lane anticipated later in the evening [1]. ING expects these speeches to maintain the prospect of an ECB rate hike in June; if this expectation is not upheld, the euro may face downward pressure [1].
Overall, the market is characterized by low volatility and a lack of clear directional movement, with traders awaiting key economic data and central bank commentary to provide further guidance [1].
CONCLUSION
EUR/USD is trading in a low volatility, range-bound environment, with downside risks linked to oil prices and upcoming ECB communications. Market participants are closely watching eurozone GDP data and ECB speeches for signals on a potential June rate hike, which could impact the euro’s direction.