Through most of this year, EUR/USD has been contained by a 1.10 to 1.06 range. During the past few sessions, the currency pair has mostly held levels above 1.10 which raises the question as to whether a new range is being drawn out, Rabobank’s Senior FX Strategist Jane Foley notes.

EUR/USD to trade in the 1.09/1.10 range

“As we argued earlier this month, we see upside risks for EUR/USD as likely to be associated with a softer USD rather than a broadly stronger EUR. These could be related to a weaker than expected US economy which would have implications for Fed rates or a Harris win in the November election.”

“This raises the question as to whether Fed rate cut hopes are still overdone and the risk of near-term dips back below 1.10. The recent softness in the USD may also reflect the view that the interest in ‘Trump trades’ that followed the disastrous TV debate between Biden and Trump in June may have been premature in view of Harris’ relatively better performance in the polls.”

“Although Harris’ policies of a capital gains increase and efforts to limit food price gouging have not gone down well with free market economists, they are aimed squarely at mustering up support among consumers and may boost her position in the polls. On balance, while we can not rule out another dip to the EUR/USD1.08 area in the weeks ahead, we expect EUR/USD to 1.09/1.10 area to become more comfortable for EUR/USD in the coming months.”