Euro: Consolidation with downside risks against US Dollar – Scotiabank
Scotiabank strategists Shaun Osborne and Eric Theoret note the Euro (EUR) is consolidating in a tight range around the mid-1.15s as markets await the Federal Open Market Committee (FOMC).
Scotiabank analysts Shaun Osborne and Eric Theoret report the Euro (EUR) is currently in a tight range around 1.15, awaiting the Federal Open Market Committee (FOMC) decision. Eurozone Industrial Production data had a minimal effect on market sentiment. Implied volatility indicates a small move is already priced in. Technical analysis suggests a pause before further EUR/USD decline to the 1.1450-1.1475 range if support breaks.
Eurozone July Industrial Production data came in at a 0.1% decrease, slightly better than expected forecasts of a 0.2% drop, but had no impact on EUR sentiment. Overnights have seen a modest increase in volatility, implying a breakeven move in spot of about 50 pips, suggesting markets may have largely priced in a hawkish Fed outcome.
Short-term technicals for EUR/USD point to a neutral/bearish outlook, with the pair currently consolidating in a narrow range around the mid-1.15s. A decline below 1.1515/20 could further drive EUR/USD lower to 1.1450/75, with resistance at 1.1565/75.
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