Euro: Rally vulnerable to reversal against US Dollar – Scotiabank
Scotiabank strategists Shaun Osborne and Eric Theoret highlight that the Euro (EUR) is softer against the Dollar (USD) after an almost 3% rally from late July, with price action turning defensive.
Scotiabank analysts Shaun Osborne and Eric Theoret indicate the Euro (EUR) is weaker against the US Dollar (USD) following a near 3% gain from late July, with trading sentiment shifting defensive. Analysts are watching key data such as German IFO business sentiment figures and political uncertainties like widening Bund-BTP spreads in Europe, along with French budget talks.
The EUR/USD currency pair remains technically favorable, with resistance at 1.1700 and support around 1.1580/1.1600. The EUR is presently trading at a slight 0.1% decline against the USD, hinting at a potential reversal. However, limited fundamental data and a recent jump in US Treasury yields have slightly eroded the EUR's support.
Political risks rise due to widening intra-euro area government bond yields, as well as French budget negotiations and polls suggesting Marine Le Pen's strong performance. While the Relative Strength Index (RSI) is bullish, hovering near the overbought level of 70, recent price patterns show resistance near 1.1700 and support around 1.1580/1.1600.
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