06:18 AM EDT, 08/15/2024 (MT Newswires) -- The eurozone economy doesn't have a lot to shout about at the moment, said ING.

A rebound in the Chinese economy remains elusive, wrote the bank in a note. Yet the prospect of the United States economy and interest rates converging on the lower levels in the rest of the world is proving supportive for EUR/USD.

This can be seen in the foreign exchange (FX) options market, where in the one-month tenor, the price of a euro (EUR) call option over a euro put option has turned positive for the first time since February 2022, stated ING. The bank feels EUR/USD had the legs to move to 1.12.

ING would like to keep this bias for the time being even though the prospect of European Uonion fiscal consolidation and potentially wider sovereign spreads may reappear in September.

The bank sees EUR/USD support at 1.0985/1000 and any softer US activity data could drag it up towards 1.11. While it is tempting to say that EUR/USD will remain in a 1.05-1.11 range for evermore, ING would caution that realized EUR/USD volatility has been exceptionally low over the last couple of years and that range breakout should be respected.