The euro (EUR) is weak, down marginally 0.1% against the US dollar (USD) while drifting to new local lows at levels last seen in early November, according to Sean Osborne and Eric Theort, chief FX strategist at Scotiabank.
The euro is weak due to tight spreads
“Interest rate spreads are narrowing modestly within their range, eroding some fundamental support for the euro as markets tempered expectations for Fed easing. Outlook for the ECB remains neutral, reflecting central bank communications.”
“Short-term interest rate markets are pricing in little in terms of policy changes through October 2026. Fundamental releases remain limited ahead of the initial PMI release on Friday and broader developments are likely to continue to dominate.”
“Wednesday’s significant pullback has pulled the euro toward early November lows and the RSI below 40, suggesting modest downside momentum. Support appears limited ahead of the November 5 low at mid/high 1.14, and a breakout would shift focus to the early August low around 1.14. We look for a near-term range between support around 1.1480 and resistance around 1.1580.”
