EUR underperforms, slips under 1.11 – Scotiabank

Weak August regional CPI readings from Germany alerted markets to the risk that the national data (8.00ET) will undershoot expectations (unchanged M/M and 2.1% Y/Y, down from 2.3% in July), Scotiabank’s Chief FX Strategist Shaun Osborne notes.

Weak German regional CPI data disapoints

“Soft data weighed on Eurozone short rates (compressing EZ/US 2Y spreads somewhat) and drove the EUR back through the 1.11 area before spot steadied.”

“The softer EUR tone evident this week this week has edged spot below short-term support (August rally bull trend) at 1.1100 today.”

“EUR losses are not showing signs of picking up below the figure at this point but the soft undertone could extend back to the mid-1.10s unless the EUR can regain 1.11+ in fairly quick order.”