EUR down marginally vs. USD – Scotiabank

The Euro (EUR) is soft, down a marginal 0.1% against the US Dollar (USD) but outperforming most of the G10 currencies into Tuesday’s NA session. Sentiment is dominating in an environment of renewed trade tensions, offering the EUR some relative support as an alternate haven, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

EUR shows relative outperformance against G10

"Germany’s ZEW sentiment data were weaker than expected, disappointing on both the current situation and expectations sub-indices and offering some additional downside risk to the outlook for industrial production. German-US yield spreads remain steady, offering no fundamental justification for the EUR’s latest pullback. "

"Regional political developments remain a key concern as markets eye returning French PM Lecornu’s latest attempt at passing a budget. The National Rally’s Le Pen is said to be planning a no-confidence vote on Thursday. France-German yield spreads are one again widening, signaling renewed concerns about the near-term balance of risk."

"Momentum is showing renewed bearishness and the RSI is threatening fresh lows in the upper 30s. We see no major support ahead of 1.1500 and the early August low just below 1.1400. We look to a near-term range bound between 1.1480 and 1.1620."