Societe Generale’s Kit Juckes reports that the EUR/USD currency pair has retraced 50% of its decline from its January high above 1.20 to a low of 1.1325, and is now consolidating within a range as markets await new US economic data [1]. Juckes notes that recent revisions to growth forecasts have narrowed the gap between the US and Eurozone economies: US consensus growth forecasts for 2026 have been revised down to 2.1%, while Eurozone forecasts have been raised to 0.8% from 0.5% just a few weeks prior [1].
Juckes emphasizes that the relationship between relative growth expectations and interest rate differentials has been a consistent theme since the spring, with the EUR/USD exchange rate closely following these trends [1]. He observes that unless US growth expectations deteriorate further, the EUR/USD is likely to remain within its current trading range, barring any new market developments [1].
Market participants are particularly focused on upcoming US July employment and retail sales data, which could influence the direction of the currency pair if they show signs of softness similar to previous releases [1]. However, in the absence of significant changes in economic outlook, the pair is expected to continue consolidating [1].
CONCLUSION
The EUR/USD is currently consolidating as the growth gap between the US and Eurozone narrows, with market direction hinging on upcoming US economic data. Unless there is a further deterioration in US growth expectations, Societe Generale anticipates the pair will remain range-bound.