The Euro (EUR) continues to show strength, with minor dips being well-supported and the currency trading at a new short-term high. According to Scotiabank’s chief FX strategist Shaun Osborne, there is potential for the Euro to move even higher towards the 1.0950/80 range.
This strong performance of the Euro can be attributed to narrower spreads between the Eurozone (EZ) and US, as well as some normalization in OAT/Bund 10Y spreads. This has led to the Euro surpassing its fair value estimate of 1.10+. Despite the upcoming ECB policy decision on Thursday, no changes in rates are expected.
Technically, the Euro is showing strong momentum, with indicators pointing towards bullish trends on intraday, daily, and weekly charts. This suggests that there is more room for gains and limited potential for corrections in the near term. If the Euro breaks through the low 1.09s, it could target even higher levels at 1.0950/80, with support levels at 1.0860/80.