* Amid a bullish USD environment, the EUR rate is attempting to settle into a range, recently set by persistent stalling into the 1.1500 congestion area.
* Yield and interest rate differentials are clearly behind further downside here, but with the rates market pricing in another 37-38bps of hikes from the Fed in 2018, it is no surprise to see some hesitation down at these levels after a 10 cent drop through Q2.
* As such, exhaustion and a potential short squeeze leave the pair vulnerable to a push higher again, at which point we would expect 1.1850 to be tested with a little more intention.
* Exposure levels have been considerably reduced since the start of the year, though the balance is still for the upside. Even so, this could limit downside momentum should we push lower.
* Our view is therefore skewed towards a holding pattern inside broader limits at 1.1500 and 1.2000, with any overshoot of either side likely to be limited unless growth dynamics in the US or Europe change dramatically and/or the market refocuses on the respective current accounts - as it did at the start of the year.