It appears that EUR/USD has managed to navigate the worst (barring new volatility peaks) of the US bond sell-off relatively easily, a sign that markets remain reluctant to let go of a cyclical currency like the Euro in the current market environment (despite a deteriorating outlook for the eurozone economy) and the room for a big Dollar recovery remains still narrow given markets now expect the Fed to be done with monetary tightening.

We had warned our readers that August might well have been a directionless month for EUR/USD: things can change (developments in the Russia-Ukraine conflict should be followed closely, to name one), but we have not received any strong indication so far that EUR/USD may materially drift away from a 1.09-1.11 range this month.