The EUR/USD pair continues to trade within a 100-pip price range of 1.1350–1.1450, bouncing between its boundaries. Buyers are trying to hold within the 1.14 area, while sellers aim to pull the pair toward the base of the 1.13 level. However, the mixed fundamental backdrop doesn't support any sustainable price movement—neither upward nor downward. The dollar is in a holding pattern as the market awaits the outcome of the London talks and key U.S. inflation reports, which could trigger volatility in EUR/USD. The pair is now stuck in a sideways channel within this corridor.

The Dollar Plays Lead Again

Once again, the U.S. dollar plays the lead role in the EUR/USD pair. The euro quickly priced in the results of the June ECB meeting, where the central bank cut rates by 25 basis points and effectively announced a pause or end to the monetary easing cycle. Following Christine Lagarde's comments, EUR/USD approached the 1.15 area, updating a six-week high at 1.1495. However, sellers took over the initiative on the same day thanks to relatively solid Nonfarm Payroll data. Still, EUR/USD bears could not push the pair significantly lower: after reaching 1.1372, they rushed to take profits, dampening the bearish momentum. The pair has since drifted sideways, awaiting the next catalyst.

What Could Shake the Pair?

There are two key drivers: upcoming inflation data and developments in U.S.-China (or U.S.-EU) trade talks.

The negotiation track takes precedence in terms of importance. A new round of consultations between U.S. and Chinese officials began in London, marking another effort to restart dialogue between the superpowers. The previous attempt—after the Geneva meeting—ended in failure. Tensions escalated again until Trump and Xi Jinping agreed to resume negotiations during a recent phone call.

Following the Geneva meeting (May 11), the dollar strengthened significantly across the market. On Monday, the greenback also showed growth, but EUR/USD traders remain cautious—the pair is falling but still within its range.

Structure and Expectations

The meeting includes high-level representation: Vice Premier He Lifeng leads the Chinese delegation, while Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Representative Jameson Greer are on the U.S. side.

Top officials are expected to attempt to initiate systemic trade talks at the working group level. This seems likely, given the recent phone call between Trump and Xi. However, traders will closely monitor the post-meeting rhetoric: reserved comments—or silence—will likely be interpreted negatively for the U.S. dollar.

Given the current uncertainty, it makes sense to take a wait-and-see approach to EUR/USD. Surprisingly, optimistic comments could quickly support sellers, while cautious remarks (or a lack thereof) favor buyers.

The London negotiations are the top theme for this day, especially as Monday's economic calendar is nearly empty. In addition, a 10-day "quiet period" is now in effect ahead of the June Fed meeting.

Market Positioning and Upcoming Data

Traders have already reacted to last Friday's mixed Nonfarm Payroll report and are now looking ahead to key U.S. inflation data (CPI and PPI), due Wednesday and Thursday. According to forecasts, inflation is expected to accelerate in May as the effects of Trump's new tariff policy emerge. While the Fed is unlikely to draw strong conclusions from a single report, rising CPI and PPI against the backdrop of falling ISM indexes creates an unfavorable macro setup for the dollar. The "ghost of stagflation" could deter traders from the greenback, especially if the London talks end in disappointment.

Technical Outlook

On the D1 timeframe, the EUR/USD pair remains between the middle and upper lines of the Bollinger Bands and above all lines of the Ichimoku indicator, which continues to show a bullish "Parade of Lines" signal. These signals suggest a preference for long positions. However, given the ambiguous fundamentals, it's best not to rush into longs—the news from the UK could reshape the technical picture or confirm existing signals. For now, staying out of the market is the safer option until the preliminary London talks conclude.