The EurUsd currency pair is poised for violent fluctuations in the range of 1.14 to 1.18 over the next few weeks as investors closely monitor upcoming central bank decisions and geopolitical developments. On Thursday next week, the European Central Bank (ECB) is widely expected to keep its key interest rate steady at 2.15%, opting to wait for more economic data before making further changes. Similarly, the Federal Reserve’s rate decision the following Wednesday is forecasted to remain unchanged at 4.5%. With both central banks signaling a pause in their tightening cycles until September, market uncertainty is likely to drive sharp swings within this range.
Despite the anticipated rate holds, underlying tensions remain. In the Eurozone, recent scandals concerning public finances have heightened concerns about inflationary pressures, prompting ECB President Christine Lagarde to adopt a wait-and-see approach. Higher inflation in the region could eventually force the ECB’s hand, potentially supporting a stronger euro in the medium term. On the other hand, the Fed, led by Chairman Powell, shows no sign of yielding to political pressure to cut rates prematurely, maintaining a firm stance to curb inflation in the US.
Given this backdrop, the EurUsd pair may witness elevated volatility in the weeks ahead. Uncertainty around ECB’s next moves and the Fed’s sustained higher rate could push the dollar to strengthen again, possibly approaching parity with the euro. Traders should brace for sharp swings as the market digests central bank signals and geopolitical developments, making the currency pair’s near-term path highly unpredictable.