The Euro (EUR) is showing a modest 0.2% decline as it enters Monday’s North American session, weakening towards the 1.16 level due to broad-based US Dollar (USD) strength, according to Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret.
Key Market Factors:
- Limited Fundamental Releases: Ahead of Friday’s preliminary PMI data, significant fundamental releases are scarce. Eurozone rate expectations remain stable, aligning with the European Central Bank’s (ECB) neutral guidance.
- Rising Interest Rate Differentials: Interest rate differentials are modestly increasing, providing some support as they reach new November highs and approach the upper bound of their three-month range.
- US Data Focus: Near-term risk for the EUR is heavily influenced by the broader USD’s performance and the market’s reaction to upcoming US economic data.
EUR Technical Outlook:
- Broadly Neutral Signals: The EUR’s technical signals remain largely neutral, with the Relative Strength Index (RSI) hovering around 50.
- Resistance at 50-Day MA: The 50-day Moving Average (MA) at 1.1657 appears to be acting as near-term resistance, challenging the EUR’s recent recovery from early November lows in the mid/upper 1.14s.
- Neutral Stance: Scotiabank maintains a neutral stance, anticipating a near-term trading range between 1.1550 and 1.1650 unless there is a decisive break of the 50-day MA.
