Scotiabank strategists Shaun Osborne and Eric Theoret highlight that the Euro is weaker versus the Dollar despite a more supportive rate outlook as markets focus on geopolitical risks. Risk reversals show growing demand for downside protection, while technicals remain bearish but stretched, with hammer patterns, nearby support around 1.1520–1.1500 and limited resistance up to 1.18 suggesting a near-term range-bound EUR/USD profile.

Geopolitics weigh as range consolidates

"The EUR is weak, down 0.5% vs. the USD (from Friday’s close) while entering the NA session largely unchanged from a rare gap open."

"Sentiment remains dominant as risk reversals reveal a further increase in the premium for protection against EUR weakness."

"Bearish – momentum is bearish and the RSI is hovering just above the oversold threshold at 30. The decline is showing some signs of exhaustion with a candle chart that reveals a sequence of ‘hammer’ doji’s revealing price action where buyers are continuing to attempt to regain control."

"Meaningful intraday support has been observed around 1.1520, and we would expect considerable support around 1.15."

"We see limited resistance ahead of 1.1650 and little between the level and 1.18 – given the aggressive pace of the latest decline. We look to a near-term range bound between 1.1520 and 1.1620."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)