ING forecasts limited downside for EUR/USD near 1.1650, citing subdued volatility and upcoming ECB signals for a June rate hike.
EUR/USD three-month implied volatility has fallen to 5.7%, more than 1% below realized volatility and near the lower end of its five-year range. This suggests a range-bound trading environment, with risk reversals indicating no strong directional bias.
ING notes that while oil price risks could push the pair slightly lower, support is expected around 1.1650. Key catalysts include today’s Eurozone GDP data, forecast at 0.1% QoQ, and speeches from ECB officials Christine Lagarde and Philip Lane.
Lagarde and Lane are expected to reinforce expectations for a June rate hike, which could provide near-term support for the euro.