EUR extending flat consolidation as PMI's offer little - Scotiabank

The Euro (EUR) is quietly consolidating within an incredibly tight range in the mid-1.16s, extending the flat consolidation that has prevailed over the last couple of weeks, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Focus on ECB & trade impact on rate outlook

"Preliminary PMI's for the euro area have offered a modest surprise, and the manufacturing index has unexpectedly climbed back above 50. France's readings surprised to the upside but remained in contractionary (sub-50) territory."

"For the ECB, we look to President Lagarde's speech scheduled for Saturday and Villeroy's speech on Tuesday. ECB headline risk will be important as we head into the September meeting, with a focus on recent trade policy developments and their impact on the central bank's forecast. We note the continued erosion in easing expectations for the ECB, with less than 10bpts priced in by year end."

"The medium-term trend remains bullish with a clear sequence of higher highs and higher lows since February. The latest congestion has centered around the 50 day MA (1.1646), which has offered closing support but also softened momentum down to the neutral area around 50. The two week range has been roughly bound between 1.1600 support and 1.1720 resistance, offering little in terms of near-term direction."