Societe Generale’s Kit Juckes notes EUR/USD has retraced half of its drop from above 1.20 to 1.1325 and is now stuck in a range as markets await fresh US data. He highlights that 2026 US growth forecasts have been revised down to 2.1%, while Eurozone forecasts were raised to 0.8%, with relative rates tracking relative growth expectations.

Growth and rate differentials steer pair

“After retracing 50% of the fall from January’s high above 1.20 to the low at 1.1325, EUR/USD is leaving me humming nursery rhymes – the dollar is neither up nor down, waiting to find out whether soft US July employment and retail sales data will be repeated.”

“We have already seen US consensus growth forecasts for 2026 revised back down a touch (to 2.1%) and Eurozone forecasts revised up (to 0.8% from 0.5% just a few weeks ago).”

“This has told a consistent story since the Spring: Relative rates are tracking relative growth forecasts, and the exchange rate is following.”

“The bad news is that unless we see US growth expectations deteriorate further, we will see EUR/USD settle into the current range, unless something new comes along.”