The euro has struggled so far this year. This dilemma is likely to continue.

Eurozone policymakers rarely showed a unified fiscal policy stance in 2020, boosting the euro, which has been depressed against the dollar so far this year in the absence of positive news.

The ECB is in a model where interest rates have been low for a longer time, and its monetary policy stance is particularly dovish in the Gmur10 countries, putting pressure on the euro. European Central Bank President Christine Lagarde has officially said that if she withdraws from the epidemic-resistant bond purchase operation (PEPP), she will switch to a new model, and it is conceivable that longer-running asset purchase programs may adopt the flexibility of PEPP or make other adjustments. The key, however, is that the ECB's bond-buying programme will continue in some form, much longer than anyone expected.

Options traders are also aware of these factors, with three-month risk reversal indicators showing a total lack of confidence in the future direction of the euro.

The euro / dollar has basically followed the trend of real yields in the euro zone so far this year, and if it continues, the euro may consolidate in a range, making it difficult to achieve an upward breakthrough. In fact, current volatility pricing shows that the euro exchange rate will be limited to 1.2106 over the next three months, with 68% certainty, and there seems to be little reason to refute this scenario.