Key Moments:
- HSBC Global Research notes that EUR/USD has stayed stable despite EU-US trade uncertainty.
- The bank believes most US policy risk is already reflected in EUR/USD, which trades above interest rate differentials.
- HSBC expects EUR/USD to test the top of its recent range, but fresh highs are unlikely due to muted wage growth and weak credit conditions.
HSBC Assessment of Current EUR/USD Dynamics
HSBC Global Research reports that EUR/USD has remained resilient amid unresolved EU-US trade issues. In addition, pricing in the currency pair already incorporates a large portion of US policy risk.
Furthermore, the Euro benefits from fiscal expansion and a recovery in production activity. However, structural constraints—such as subdued wage growth and modest credit conditions—limit the potential for a stronger move higher.
Guidance on Expected Trading Range
According to HSBC, EUR/USD is likely to gravitate toward the upper boundary of its recent trading band. Nevertheless, the bank does not foresee a sustained breakout to new highs under current macro conditions.
Moreover, expansionary fiscal measures provide some upside support. Still, without stronger wage growth or a more pronounced credit cycle, a significant Euro rally seems unlikely.
| Factor | HSBC View on Impact for EUR/USD |
|---|---|
| EU-US trade policy uncertainty | Pair remains stable despite ongoing uncertainty |
| US policy risk | Mostly priced in; EUR/USD trades above interest rate differentials |
| Fiscal policy and production in Europe | Expansionary fiscal stance and production recovery provide upside support |
| Wage growth and credit cycle in Eurozone | Limited wage gains and muted credit dynamics constrain a strong rally |
| ECB policy outlook | Influence is limited; no rate changes expected through 2026 |
Direct Commentary from HSBC Global Research
“EUR/USD remains stable despite ongoing EU-US trade uncertainty.”
“With EUR/USD trading above interest rate differentials, most US policy risk seems priced in.”
“Over the coming weeks, we expect EUR/USD to drift toward the upper end of its range without reaching new highs.”
“Expansionary fiscal measures and recovering production offer some support. Yet, without stronger wage growth or a pronounced credit cycle, a significant rally is unlikely.”
“The ECB’s influence on EUR is limited, with no rate changes anticipated through 2026.”
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
