EUR steady ahead of Thursday's ECB - Scotiabank

The Euro (EUR) is entering Wednesday's NA session flat against the US Dollar (USD) and also unchanged from Friday's close, having relinquished much of its gains observed earlier in the week, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Range bound between 1.1650 and 1.1750

"There have been no major overnight releases and markets remained focused on Thursday's ECB with a widely expected hold. Forecast changes will be closely scrutinized, however few surprises are expected in terms of their implications for the ECB's rate outlook as policymakers have generally maintained a neutral tone in their recent comments."

"Fundamentally, interest rate differentials remain supportive for the EUR, as yield spreads trend higher on Fed/ECB divergence. In France, President Macron has appointed former defense minister Lecornu to become his latest PM. Bond markets remain generally calm, though France's yields are now trading in tandem with Italy's."

"The EUR's bullish break has faltered somewhat and recent price action has delivered a pullback to the descending trend line drawn from the July highs. The trend line had been broken earlier this week, and the nearterm direction is pivotal as we consider the possibility of a push to fresh multi-year highs. Failure from here would be consequential. The RSI has softened back toward the neutral level of 50. We look to a near-term range bound between 1.1650 and 1.1750."