According to Scotiabank FX strategists Shaun Osborne and Eric Theoret, the Euro (EUR) remains unchanged against the US Dollar (USD) amid quiet market conditions leading into Wednesday’s North American session. They note that the EUR has traded in a flat range since June, attributing its recent pullback to a mix of broader geopolitical issues and softer inflation data from France and Germany.
ECB Guidance Remains Neutral While the yield spread between German and US bonds has narrowed slightly, eroding some fundamental support for the Euro, the strategists note that these spreads remain elevated near recent multi-year highs.
Recent data showed preliminary Eurozone CPI matching consensus at 2.0% y/y, although the core reading slightly missed expectations at 2.3% (versus the forecast of 2.4%). This aggregate Euro area data contrasts with recent releases from major individual member countries, which may provide market participants with some reassurance and offer support to the currency.
Attention now turns to ECB officials. While Pereira is scheduled to speak at 5:30 pm ET today, the primary focus will likely be Chief Economist Lane’s speech on Friday. Generally, policymakers have maintained neutral guidance but continue to lean hawkish regarding the ultimate path of interest rates.
Technical Outlook Technically, the broader trend remains flat, and the recent pullback has been minimal. Momentum is currently neutral, indicated by the RSI hovering around the 50 threshold. Scotiabank continues to highlight key near-term trend support at the 50-day moving average of 1.1647, expecting the currency pair to remain range-bound between 1.1650 and 1.1750 in the near term.
