EUR is underperforming on the day - Scotiabank

The Euro (EUR) is soft, down 0.2% against the US Dollar (USD) and underperforming all of the G10 currencies into Wednesday's NA session, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Focus on trade ahead of Thursday ECB and PMI update

"Sentiment appears to be dominating, with a focus on trade as markets react to news of a US/Japan trade deal and consider the lack of progress on an agreement between the US and EU. Fundamentally, short-term spreads are climbing modestly and offering the EUR support."

"All eyes are on Thursday's ECB with a widely expected hold and focus on the tone of communication, given that policymakers have been broadly neutral signaling a high degree of comfort with current settings while rates markets have continued to price a 25bpt rate cut by year end. The euro area will also release preliminary PMI's on Thursday, where manufacturing is expected to remain in sub50 contractionary territory while services is expected to hold steady in expansion (50+)."

"The multi-month trend is intact with a clear sequence of higher lows and higher highs since February. The RSI is in bullish territory, well above 50, and the 50 day MA remains an important level of medium term support. We look to near-term support below 1.1650 and expect resistance above 1.1780."