The Euro (EUR) is trading flat against the US Dollar (USD) and consolidating within increasingly narrowed ranges despite ongoing political uncertainty and major near-term risks, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

EUR is quiet ahead of Monday’s French vote

"All eyes are on Friday’s US payrolls release and Monday’s French confidence vote. President Macron is rumored to be seeking a path forward in which France can avoid new elections, which seems to be reassuring markets as French yields tumble and spreads (vs. Germany) narrow."

"The outlook for relative central bank policy remains supportive for the EUR, and a shift in focus back toward fundamentals would likely offer it a significant near-term boost. The 2Y Germany-US yield spread has broken its 2025 highs and is now at levels last seen in October. Markets are still slowly shedding their expectations for ECB easing while still pricing about 8bpts of cuts by year-end."

"The RSI is right at the 50 level, the threshold dividing bullishness and bearishness. Recent price action has been confined by congestion around the 50 day MA (1.1665), and we continue to highlight the importance of descending resistance around 1.1720. We look to a near-term range bound between 1.1600 support and 1.1720 resistance."