EUR weak despite as-expected CPI – Scotiabank

The Euro (EUR) is weak, down 0.5% against the US Dollar (USD) and a mid-performer among the G10 in an environment of broad-based USD strength, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret note.

Markets eye lack of progress on trade

"The euro area’s final CPI release was in line with expectations, at 2.0% y/y and unchanged from the preliminary. The on-target inflation print offers little for the ECB as we look to next Thursday’s meeting where rates are widely expected to remain on hold."

"Markets are still pricing in 25bpts of easing by year-end and we see this as a source of fundamental support for an ECB that appears to be comfortable at current (and likely terminal) levels. Progress on US/EU trade talks appears limited as media continue to report on the EU’s ‘anti-coercion instrument’ offering the ability to impose new taxes on US tech companies, target investment curbs in the US, and limit market access in the EU."

"The recent bear reversal is worrisome and is threatening the multi-month bull trend from February. The RSI has fallen dramatically, from significantly overbought levels in the mid-70s to push below the neutral threshold at 50. We continue to highlight the importance of the 50 day MA (1.1492) and see near-term support closer to 1.1550. We look to near-term resistance in the mid-1.15s."