Euro Consolidation Hints at Further Decline Against US Dollar

Scotiabank strategists Shaun Osborne and Eric Theoret are warning that the Euro (EUR) is consolidating in a tight range around the mid-1.15s, with downside risks against the US Dollar. The pair has been holding steady ahead of the Federal Open Market Committee (FOMC), which is due to meet soon.

The Eurozone Industrial Production data released last month had little impact on sentiment, with a 0.1% decline in July compared to forecasts of a 0.2% drop. Implied volatility has also suggested a modest move in the EUR/USD pair, implying a breakeven move of around 50 pips.

The technical view from Scotiabank points to a pause before renewed losses for the EUR/USD, with support breaking at around 1.1515/20 targeting a further decline to 1.1450-1.1475.