Scotiabank strategists Shaun Osborne and Eric Theoret note that the Euro (EUR) is underperforming against its major peers, with EUR/USD trading around 1.1212. The weakness is attributed to persistent tensions in Eurozone bond markets, particularly the elevated 10-year French OAT/Bund spread, which remains near 150 basis points. This spread reflects ongoing social and fiscal strains in France, which are weighing on the Euro's performance.
The German ZEW survey for October showed a modest improvement in the current situation index, rising to -35.9 from -47.1 in September, though expectations softened slightly to 28.1 from 33. The survey suggests the Eurozone economy is in a slow recovery phase, limiting the Euro's upside potential. The strategists describe the Euro as little changed on the day, with sentiment and momentum preventing it from capitalizing on a weaker USD tone.
Intraday support for EUR/USD is identified at 1.1175/80, while resistance is seen at 1.1275. Despite a bullish impulse on the weekly chart last week, the Euro has yet to leverage this momentum, remaining neutral in the short term.