EUR quiet and consolidating last week's recovery with support from spreads - Scotiabank

The Euro (EUR) is quietly consolidating in the mid-1.15s and entering Monday's NA session unchanged from Friday's close, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Near-term risk in Tuesday's ZEW

"Last week's recovery was fundamentally driven as yield spreads narrowed in a EUR-supportive manner, largely reflecting a renewed softening in Fed expectations. ECB expectations remain steady however, as short term rates markets reflect the central bank's decidedly neutral message."

"The options market is also leaning bullish EUR, with three month risk reversals moving to once again price in a premium for protection against upside after a short lived dip below zero (favoring puts). In terms of data, this week's highlight will be Tuesday's ZEW sentiment survey with expectations of an improvement in both the current situation and expectations indices."

"Last week's recovery was important with a notable bounce off of support below 1.15. Momentum was also oversold, with the RSI bottoming just above 30. We see limited near-term resistance ahead of the 50 day MA (1.1665) and look to a near-term range bound between 1.1520 and 1.1620."