Euro: Support holds near 1.15 against US Dollar – Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret report EUR/USD is fractionally lower but stabilizing just above Monday’s one-month low in the mid/lower-1.15s. They note supportive fundamentals via steady yield spreads and hawkish European Central Bank (ECB) rhetoric, with fair value near 1.1625. Technically, 1.15 is seen as a critical support level, while resistance is identified above 1.16 around the 200-day moving average.

Fundamentals and spreads back Euro

"The EUR is down a fractional 0.1% vs. the USD but holding in just above Monday’s one month low and attempting some stabilization in the mid/lower-1.15s."

"This week’s data highlight, the ZEW investor sentiment survey, was mixed as the expectations component disappointed while the current situation series delivered an impressive surprise and a meaningful recovery."

"The near-term focus remains centered on broader themes and the market’s tone, as we look to Wednesday’s Fed and consider its impact on sentiment."

"The options market remains muted and continues to trend toward neutral settings. The EUR’s fundamentals are supportive with yield spreads holding steady as ECB policymakers remain hawkish. A narrow FV estimate based on Germany-US 2Y yield spreads alone is currently at 1.1625."

"Neutral/bearish – the EUR’s latest pullback looks to have found near-term support in the mid/lower-1.15s, around the 50 day MA at 1.1534. The RSI is bearish below the neutral threshold at 50, but only moderately so in the low 40s and well above the oversold threshold at 30."

"The 1.15 level remains critical as a break would violate the broader recovery from July. We see near-term resistance above 1.16, around the 200 day MA at 1.1633."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)