EUR off earlier peaks above 1.17 – Scotiabank

FXStreet Insights Team FXStreet

Euro (EUR) gains extended to the low 1.17 area overnight before easing back modestly but the broader backdrop of trade, rate and sentiment challenges for the USD as well as hopes that US pressure for an end to the Ukraine war as Trump/Putin plan to meet in Budapest are all combining to lift the EUR mood, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

EUR is likely to remain supported on dips

"Short-term Eurozone/US interest rate differentials have narrowed back to the level (-150bps at the 2Y sector of the curve) seen last month when the EUR peaked around 1.19. EURUSD should remain well supported on dips."

"Technical patterns are mixed. On the one hand, the EUR has slipped back far enough from its intraday peak to suggest a short-term high may be in place. On the other, a solid gain on the week, driving a bullish 'piercing line' pattern on the weekly candle chart, puts a clearly positive spin on the longer-term outlook."

"Net net, some short-term drift lower in the EUR is a risk but look for support to emerge on dips to the low/mid 1.16s."

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FXStreet Insights Team

FXStreet

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