EUR outperforming with modest gain as spreads remain supportive – Scotiabank

The Euro (EUR) is up a modest 0.3% against the US Dollar (USD) and outperforming most of the G10 currencies as we head into Thursday’s NA session, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Latest pullback is showing some signs of stabilization

"The euro area unemployment rate came in lower than expected, at 6.2%, and German state level CPI data have been mixed ahead of the 8:00am ET national release (2.0% y/y exp). Fundamentals for EURUSD remain supportive, as we note the steady climb in yield spreads reflecting a market that is pricing out ECB easing to a greater extent than what’s being observed for the Fed."

"The latest pullback is showing some signs of stabilization and the RSI is bouncing from oversold levels. Support has been clearly observed at 1.14, and gains from Wednesday’s close have shown signs of a nascent recovery. A return to/above the 50 day MA (1.1574) would provide confirmation of a resumption of the bull trend. We look to a near-term range bound between 1.1400 support and 1.1500 resistance."