The EUR/USD pair has seen little movement this week, holding near 1.1650 despite notable swings across global financial markets. According to Commerzbank FX analyst Volkmar Baur, while volatility in bonds, gold, and oil markets has surged, the foreign exchange market remains unusually calm.
FX Market Unmoved by Broader Market Swings
Baur notes that even as 10-year US Treasury yields fell to their lowest levels in over a year, the US Dollar (USD) remained largely unaffected. Similarly, dramatic shifts in gold prices — which surged sharply on Monday before dropping more than 5% on Tuesday — failed to influence EUR/USD.
“There has been some discussion of a so-called ‘debasement trade,’ suggesting that rising gold prices signal a loss of confidence in fiat currencies,” Baur explained. “However, such a trend would require depreciation across a wide range of real assets, including goods and real estate — something we are not seeing.”
Oil Prices and Volatility Remain Contained
Despite Brent crude jumping more than 5% following new US sanctions on Russia, the EUR/USD pair showed little reaction. While oil-exporting currencies like the Norwegian krone and Swedish krona posted modest gains, currency markets overall remained subdued.
Baur added that EUR/USD’s implied three-month volatility has dropped to its lowest level since the last US election, reflecting investors’ lack of directional conviction.
US Inflation Data Could Spark Movement
Looking ahead, Commerzbank expects today’s US inflation figures could inject some short-term movement into the pair. “While the calm in exchange rates may persist, the current geopolitical backdrop — including next week’s meeting between Donald Trump and Xi Jinping — suggests that volatility could return soon,” Baur concluded.
