Euro Trades Soft as EUR/USD Consolidates - Scotiabank
The Euro (EUR) is experiencing a period of softness within its recent trading range, yet it remains resilient, trading just above the lows set on Friday and Monday, according to Scotiabank's Chief FX Strategists, Shaun Osborne and Eric Theoret. This consolidation comes despite a mix of Eurozone economic data.
Mixed Eurozone Data and EUR's Resilience
The Eurozone's second-tier industrial production figures exceeded expectations, and Germany's fiscal deficit for 2025 was lower than anticipated. Meanwhile, France's final CPI figures aligned with preliminary estimates, offering limited new insights for policymakers as they prepare for the European Central Bank's (ECB) upcoming decision on February 5th.
ECB's Neutral Shift and Market Stability
ECB policymakers have recently adopted a more neutral stance, moving away from the hawkish tone observed after the December meeting. This shift is reflected in steady yield spreads and positive risk reversals, providing additional support to the market.
EUR's Consolidation and Near-Term Outlook
The EUR's recent pullback has resulted in a consolidation phase around the 50-day moving average (MA) at 1.1662. The currency is currently trading within a near-term range, with support at 1.1620 and resistance at 1.1700. Scotiabank maintains a neutral stance, anticipating continued consolidation in the short term.
