The Euro (EUR) is steady, trading flat against the US Dollar (USD) and consolidating in a tight range just above 1.16. The preliminary euro area PMI’s were released and revealed a modest recovery in manufacturing, reaching the neutral (neither contracting or expanding) threshold at 50, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

EUR’s technicals are neutral

"Services also surprised to the upside, gently climbing further into modest expansion to print 52.6 (from 51.3 & vs. 51.1 exp.). The releases for Germany revealed a marginally contractionary level in manufacturing along with a solid surprise in services (54.5 vs. 51 exp. & 51.5 prev.) while France remained in contraction for both manufacturing and services."

"The EUR’s fundamentals remain bullish as we note the continued rise in Germany-US spreads, offering support as they threaten a break to fresh highs. Markets are expecting no change at next Thursday’s ECB decision. Finally, we note the renewed political uncertainty in France as the PM’s coalition struggles to navigate its budget discussions and specifically the topic of pension reform."

"The EUR’s technicals are neutral, reflecting a flat range since July, a flattened 50 day MA (1.1687), and an RSI that is holding close to the neutral threshold at 50. The local range is bound between last week’s low at 1.1550 and last Friday’s high above 1.17. We look to a near-term range bound between 1.1580 and 1.1680."