EUR consolidates around 1.16 – Scotiabank

The Euro (EUR) is quietly consolidating in a tight range around 1.16, trading just below Tuesday’s fresh multi-year high that reached levels last seen in September 2021. The EUR’s gains have been fundamentally driven, resulting from an ongoing shift in the outlook for relative central bank policy and a continued build in easing expectations at the Fed.

EUR is just below Tuesday’s multi-year high, supported by yield spreads

“The 2Y Germany-US spread has narrowed about 15bpts over the past week, providing the EUR with a fundamental support that had been lacking since the eruption of trade tensions in early April. Wednesday’s release calendar has been limited to France’s consumer confidence figures, which remained unchanged.”

“The euro area will release consumer confidence figures on Friday and Germany will release its GfK (consumer) confidence figures Thursday. The trend is bullish, with a clear sequence of higher lows and higher highs since early February. Tuesday’s high pushed to the mid1.16s, reaching levels last seen in September 2021.”

“Momentum is bullish and confirming the trend, and an RSI in the mid-60s leaves ample room for further nearterm upside ahead of the overbought threshold at 70. In terms of support, we continue to highlight the importance of the 50 day MA (1.1377). Closer support is expected in the 1.1550-1.1520 area. We see limited major resistance ahead of the 1.1720-1.1750 area.”