EUR well supported on easing political concerns as spreads push higher – Scotiabank
|The Euro (EUR) is entering Thursday’s NA session with marginal gains as it extends Wednesday’s impressive recovery from a sub-1.16 intraday low, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.
RSI is marginally bullish and back above 50.
"Sentiment is dominating as market participants breathe a sigh of relief over easing political concerns in Europe. The Dutch PM won Wednesday’s confidence vote and France’s PM is making a considerable effort to negotiate with lawmakers ahead of his own Sept 8 confidence vote."
"The French-German 10Y spread has pulled back below the psychologically important 80bpt level and fundamentals are offering considerable support as we note the continued rise in the 2Y Germany-US yield spread, threatening a break of the March high offering a potential push to levels last seen in October. Data releases have been limited to second tier money supply and confidence figures, ahead of Friday’s highlight – the German preliminary CPI figures."
"Wednesday’s hammer doji (bullish reversal) was notable, and gains have extended with a break above the 50 day MA (1.1659) trend congestion level. The RSI is marginally bullish and back above the bearish/bullish dividing threshold at 50. We see limited resistance ahead of the lower 1.17s and look to a near-term range bound between 1.1620 and 1.1720."
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