The Euro (EUR) is down 0.2% vs. the USD and a relative underperformer against most of the G10 currencies, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

EUR underperforms on worrisome political developments in France

"Overnight releases included a weaker than expected PPI print from Germany, along with weaker retail sales data from France. French business sentiment figures were mixed, however markets appear to be preoccupied with ongoing political uncertainty that has been compounded by Thursday’s massive anti-austerity protests."

"PM Lecornu is set to speak with union leaders as he seeks to gain support for a budget that is expected to include significant spending cuts. Bond market turbulence remains limited, and French bond yields continue to trade slightly higher than their Italian counterparts. In terms of fundamentals, interest rate differentials have seen a slight adverse shift on the back of the post-FOMC reassessment of the Fed’s path."

"The EUR’s pullback has been sharp, with a decisive reversal that has pulled the RSI back toward the neutral threshold at 50. We look to support around the previously broken descending trend line drawn from the July highs, and would expect it to limit losses below 1.17. We would expect additional support around the 50 day MA (1.1668). We look to a near-term range bound between 1.1720 and 1.1820."