EUR soft and hitting fresh local lows around 1.15 – Scotiabank

The Euro (EUR) is soft, down a modest 0.2% against the US Dollar (USD) and a mid-performer against all of the G10 currencies, hitting fresh local lows around 1.15 in an environment of renewed USD strength. Fundamental releases have been limited, and comments from the ECB have remained neutral, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Spreads a dominant driver

"The EUR’s correlation to spreads has recovered and suggests a fundamentally-driven market environment with a focus on the outlook for relative central bank policy. Last week’s hawkish Fed cut eroded some of the EUR’s support however the 2Y US-Germany yield spread remains bound within its recent range."

"Momentum is bearish with an RSI drifting slowly toward the oversold threshold at 30. The EUR is hitting fresh local lows around 1.15 and its flat range from June offers little ahead of the lower bound just below 1.14. We look to a near-term range bound between 1.1450 and 1.1550."