Scotiabank strategists Shaun Osborne and Eric Theoret report that the Euro (EUR) has maintained stability in the mid-to-lower 1.15 area against the US Dollar, trading close to its fair value as determined by the 2-year US–Germany yield spreads [1]. The strategists note that both fundamentals and sentiment are constructive, which has underpinned the EUR's recovery since early Q3 [1]. Short-term technicals are described as bullish, with the EUR breaking above the 50-day moving average at 1.1476, signaling a clear bullish shift in momentum [1].
Recent economic data, specifically the final services and composite PMIs, showed a fractional improvement over preliminary readings, indicating marginal growth across the euro area. However, there was a slight contraction in France and Germany in July [1]. Despite these mixed signals, the EUR continues to trade within a narrow fair value estimate based on the 2-year spreads, suggesting limited directional risk from a fundamental perspective [1].
From a technical standpoint, near-term resistance is identified around 1.1550, with a preferred trading range between 1.1500 and 1.1600. The next significant resistance level is seen at the 200-day moving average at 1.1630 [1]. The strategists emphasize that the trend in both fundamentals and sentiment remains constructive, providing a solid basis for the EUR's ongoing recovery [1].
No specific market reactions or analyst forecasts beyond the current technical and fundamental outlook are discussed in the article [1].
CONCLUSION
The Euro's recovery is supported by constructive fundamentals and sentiment, with technicals pointing to a bullish momentum above key moving averages. The currency is expected to remain range-bound between 1.1500 and 1.1600 in the near term, with limited directional risk. Market participants are likely to watch for further developments in economic data and yield spreads for future direction.