EUR extends tight trading range - Scotiabank

The Euro (EUR) is up a modest 0.2% vs. the US Dollar (USD) and a mid-performer among the G10 currencies as we head into Friday's NA session, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

EUR sees no lift from higher spreads

"The EUR's latest trading range has been incredibly tight and has failed to capture the most recent recovery in eurozone-US yield spreads that should have delivered considerable fundamental support. The latest data releases have confirmed tepid services growth in the final PMI's and softer than expected euro area PPI, along with an unexpected contraction in France's industrial production figures in August."

"France's new PM is still seeking to build a coalition to pass a budget ahead of October 13, a legislative deadline for parliament. Political rivals are threatening to let the government fail if the budget is not passed by the deadline, risking the possibility fresh elections for France (or at the very least another PM)."

"We see no compelling directional bias to the EUR's technicals, as the RSI hovers around the dividing threshold at 50. The latest consolidation remains constructive from a medium-term perspective, as it has taken place above both the 50 day MA (1.1678) as well as the descending trend line drawn from the July highs. We see no major resistance ahead of 1.1820 and the midSeptember high above 1.19. We look to a near-term range bound between 1.1700 and 1.1800."