The euro tried to claw back lost ground in the first half of Monday but has no real support, and trading in both the euro and the pound remains inside sideways ranges. Friday's European data gave euro buyers no fresh argument, Bank of England comments did not help the pound sterling, and US data, by contrast, reinforced the dollar. Today's calendar is empty, so market focus shifts to what central bank officials will say.

Friday's European release was lending data, and the figures point to no momentum: lending was unchanged at 3.1% in August, the same as in July. Lending shows how willing the economy is to borrow at current funding costs and thus reflects the strength of domestic demand. The market saw neither acceleration that would bolster the ECB's hawkish case, nor a clear slowdown that would justify easing. The dollar benefits from this pause, while euro buyers who expected an impulse lose out.

The pound also lacked support. Bank of England Governor Andrew Bailey spoke earlier in the day and, from his remarks, the central bank is not joking about interest rates — a rise before year-end cannot be ruled out. Why isn't the British pound rallying if London is hinting at tightening? Because the market looks at both the BoE and the Federal Reserve, and expectations of a more aggressive US policy outweigh British hints. So far, London's hawkish rhetoric has not paid dividends for the pound sterling, since the dollar remains the main recipient of investor interest.

US economic data proved firmer than expected. Durable goods orders in August were flat after a 0.9% rise in July, while a decline had been expected. The indicator reflects how much equipment and other long-lived goods companies are ordering and thus serves as a proxy for investment activity and demand. The absence of a drop where one was expected reads as a sign of resilience and benefits the dollar — the euro fell in response.

The University of Michigan consumer sentiment index also supported the dollar, rising to 48.1 in September from 47.8 in August. More notable than the index itself were household inflation expectations, which rose from 4.0% in August to 4.6% in September and matched the preliminary estimate. People who expect higher prices demand higher wages and factor inflation into decisions sooner, which feeds inflation and leaves the Fed little room to pause. Recall that the Fed raised rates this month for the first time since 2023, and the market prices at least one more 25-bp rate hike before year-end.

There will be no major euro-, UK- or US-specific fundamental prints today, so the vacuum will be filled by officials' speeches. ECB President Christine Lagarde and Fabio Panetta (Elderson) will speak for the ECB. The ECB's stance is hawkish but already priced in, so another hawkish comment may only give the euro a short lift, while any softening of tone would be a surprise. From the BoE side, Sir David Ramsden, Deputy Governor for Markets and Banking, will speak. Officials like him typically explain how the bank views inflation, the labor market and financial conditions, and traders look for clues about the policy path. For the pound sterling, it matters whether he will support the scenario of a possible rate rise before year-end — without that support, the currency pair remains dependent on the dollar.

The main interest for the dollar will be speeches by Lisa Cook, Thomas Barkin, and Michelle Bowman. Last week, many Fed policymakers said interest rates need to rise further, citing bond market conditions and inflation. If today's remarks continue that line, the dollar will gain fresh support, and the euro and pound will remain under pressure. If one of the three notably softens his tone — which I consider unlikely — dollar buyers might pause.

EUR/USD

The working range is 1.1362–1.1386. Support at the bottom is 1.1362, which coincides with last week's low; a false break below that level would provide a reason for a recovery to 1.1386. A break and hold above the range would open a chance to rise to 1.1410, with a further target at 1.1433, where I would look to sell the bounce for a 15–20 pip move. Short positions are possible on a false break of 1.1386 or 1.1410 inside the range, targeting the lower bound 1.1362. If bears confidently break the range and the price trades below 1.1362, I will add short positions targeting 1.1335 and 1.1312, where I would then look for buy positions on a rebound of 20–25 pips. Long positions from 1.1335 or 1.1362 are allowed only on a false break, since otherwise buying would be against the trend.

GBP/USD

The working corridor is 1.3224–1.3258. The buying area is 1.3224, where a false break would keep the chance of a return to the channel top at 1.3258 (formed last Friday). A break of the range with a retest would move to 1.3284, and a further target would be 1.3313, where I would sell the bounce for a 20–25 pip correction. I am looking to go short from 1.3258 on rallies (i.e. from the channel top) on a false break, or from a false break of 1.3284. If bears take control below 1.3224, the road opens to 1.3182; long positions there are allowed only on a false break because a bearish market has been in place since September 9. I am also watching for buys on a rebound from 1.3137 aiming for a 20–25 pip move.