EUR is well supported for the time being - Scotiabank

The Euro (EUR) is up marginally against the US Dollar (USD) and looking well supported as it seeks to extend its latest recovery following the pullback from its July 1 high, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

EUR is facing renewed bull trend into Thursday's ECB

"There have been no major overnight data releases and all eyes remain centered on Thursday's ECB where markets are pricing a widely expected hold. The near-term risk lies with the ECB's communication around its rate outlook, given that recent messaging has been largely neutral and creating a sharp contrast to rates markets that continue to price about one full 25bpt rate cut by December."

"An erosion of the market's dovish bias should lend the EUR some fundamental support via spreads. In terms of sentiment, the options market is bullish and widening the premium for protection against EUR upside. In terms of positioning, the CFTC net long is extending its push to the upper end of its historical range."

"The short-term price action has turned much more constructive following the recent pullback from the July 1 high. The push above 1.17 is important, and an extension of gains should pave the way for a resumption of the medium-term bull trend from the February low. The RSI is looking comfortable in bullish territory (back above the 50 threshold) and we look to a nearterm range bound between 1.1650 support and 1.1750 resistance."