EUR holds gains as Fed/ECB spread widens – Scotiabank
|The Euro (EUR) is consolidating this week’s advance, supported by widening rate differentials and a neutral ECB outlook, with little reaction to soft euro-area data. Bullish momentum is intact after clearing the 50-day MA, with the EUR now tracking a 1.1650–1.1750 range and eyeing resistance toward 1.18, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.
Euro steady ahead of Lane’s speech
"The EUR is quietly consolidating this week’s gains and entering Thursday’s NA session flat vs. the USD. Fundamentals remain supportive, as interest rate differentials reflect expectations for renewed dovishness at the Fed and a neutral policy outlook for the ECB. Yield spreads are up on the week, pushing to fresh 14 month highs and threatening a break to levels last seen in mid-2023."
"We note the absence of any material reaction to the release of as-expected euro area retail sales data for October (0.0% m/m) and see near-term headline risk centered around the ECB with a focus on Chief Economist Lane’s speech scheduled for 10am ET."
"The EUR’s latest gains have delivered a clear break of the 50 day MA (1.1612) as well as the mid-November highs in the mid-1.16s. The RSI is above 60 and confirming the EUR’s bullish momentum. We note the potential for near-term resistance at 1.17 and 1.1750 and highlight the importance of 1.18 as the next major resistance level. We look to a near-term range bound between 1.1650 and 1.1750."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.