The EUR/USD pair has been constrained within a narrow range of 1.08 to 1.09 over the past two weeks, largely due to significant option strike expiries. These expiries create hedging activity that helps contain price movements within this range, particularly evident this week. During the UK and US holidays, the pair traded within an even tighter range of 1.0846 to 1.0859, indicating strong resistance at recent daily highs. Notably, the high from May 16 at 1.0895 serves as a significant cap, with offers clustered around the 1.0900 level. This suggests that any attempts to break higher are likely to encounter selling pressure, limiting upside potential.

On the downside, the pair finds support from the 100-day moving average (DMA) at 1.0813 and the rising 21-DMA at 1.0795, providing a solid foundation against significant declines. The technical setup indicates a well-defined range bound by these moving averages, creating a buffer against extreme volatility. Furthermore, the low level of option-implied volatility suggests that the market does not expect significant FX volatility in the near term, reinforcing the likelihood of continued range-bound trading. Traders will be closely watching key economic data, including the German IFO index on Monday and the Euro Zone's HICP and U.S. PCE data on Friday, which could provide catalysts for breaking out of this tight trading range. However, until these events, the pair is expected to remain contained by the technical and option-related barriers.