Euro: Stabilization after FOMC volatility – Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret report the Euro (EUR) is posting a small gain versus the US Dollar (USD) as EUR/USD extends Thursday’s modest recovery and attempts to stabilize after the latest FOMC meeting. Relative policy expectations between the European Central Bank (ECB) and Fed are seen as stabilizing, with ECB policymakers remaining hawkish amid energy-linked inflation concerns and growth, while German PPI surprised to the upside.

Euro attempts post-FOMC base

"The EUR is entering Friday’s NA session with a fractional gain vs. the USD as it builds on Thursday’s modest recovery and attempts stabilization in the aftermath of this week’s FOMC."

"The outlook for relative central bank policy looks to be stabilizing as market participants assess the near-term risk of tightening from the ECB, as policymakers remain overwhelmingly hawkish tying their views to both energy-related inflation concerns as well as growth. Fundamental releases have been limited to stronger than expected German PPI."

"The EUR’s momentum indicators remain bearish but look to be stabilizing just above oversold levels suggesting limited additional weakness from current levels."

"EUR/USD short-term technicals: Bearish/neutral—the latest stabilization in spot is encouraging as we note short-term support at 1.1450 and see limited resistance ahead of the mid-1.15s."