EUR steady despite continued dovishness from ECB – Scotiabank

Euro (EUR) is entering Tuesday’s NA session largely unchanged vs. the USD while trading with modest support over the past week or so, ignoring continued dovish messaging from key policymakers at the ECB, Scotiabank's Chief FX Strategist Shaun Osborne notes.

No momentum in either direction

"Governing Council member Knot appears to be leaning toward a cut at the next meeting on June 5. The rates market is pricing nearly one full cut for the meeting and more than two cuts by the end of the year. For EUR/USD, the outlook for relative central bank policy is critical and medium-term EUR gains will require renewed support from spreads via greater pricing of Fed easing."

"In terms of the near-term data calendar, this week’s highlight will be the preliminary PMI’s scheduled for release on Thursday and Germany’s IFO business sentiment figures, also scheduled for May 22."

"The RSI is hovering around 50, indicating a complete lack of momentum in either direction. The recent range has been defined by the late April high in the upper 1.15s and last week’s support below 1.11. Near-term support is expected at 1.1150 with resistance expected above 1.1350."