Insights 
VT 
The EUR/USD exchange rate has been unable to rise above 1.180. Despite negative US news, there is little push to sell dollars, and the euro lacks a compelling narrative for growth.
Current levels may persist, with risks leaning upward due to a potential US shutdown and dovish Federal Reserve minutes. The exchange rate might stay between 1.168 and 1.176 in the near term.
Eurozone Focus This Week
This week, eurozone data input is expected to be minimal, with more focus on speeches from European Central Bank officials. President Christine Lagarde’s address is anticipated, though recent inflation data suggests no change in ECB rate policies is expected.
We are seeing EUR/USD struggle to find a real reason to break above the 1.180 level. Despite some negative news out of the US, like last Friday’s weak jobs report which showed only 95,000 new jobs were added in September, there isn’t a strong conviction to sell the dollar. The euro simply lacks its own compelling story to drive it higher.
Given this stalled momentum, traders should consider strategies that profit from low volatility in the coming weeks. Selling out-of-the-money puts and calls could be a viable approach, as implied volatility on the pair has fallen to its lowest level since August. We see a good chance the pair will remain contained within a 1.168-1.176 range.
Risks Associated With US Events
The primary risks remain tied to US events, particularly the ongoing government shutdown standoff in Washington and the upcoming Federal Reserve minutes. Historically, as we saw in the shutdowns of 2013 and 2018, the dollar often sees short-term weakness but rarely enters a long-term decline from these events alone. We expect the Fed minutes to confirm a more cautious stance, but this may already be priced into the market.
On this side of the Atlantic, we expect very little to drive the market. Recent Eurozone inflation figures for September came in right on target at a stable 2.1%, confirming the European Central Bank is comfortable with its current interest rate policy. We do not anticipate hearing anything new from ECB President Lagarde that would change this outlook.
