Scotiabank strategists Shaun Osborne and Eric Theoret report the Euro (EUR) is modestly higher, extending a sentiment-driven recovery despite softer expectations for European Central Bank (ECB) tightening. Stronger German factory orders and resilient Eurozone retail sales have helped, but they stress that broader risk sentiment is the main driver. Technically, EUR/USD is bullish, with key support in the mid-1.16s and upside focus on 1.1825.

Bullish bias with clear upside targets

"The EUR is entering Thursday’s NA session with a modest 0.2% gain as it seeks to extend its recent sentiment-driven recovery."

"The outlook for relative central bank policy has softened somewhat, with a notable moderation in expectations for ECB tightening with June now priced for 19bpts and September just shy of 50bpts."

"The erosion of fundamental support has been offset by the improvement in the broader market’s mood, and sentiment remains the dominant driver in the current environment."

"The next major upside target is the 61.8% Fibo at 1.1825, and a break would pave the way for a full retracement and a push back above 1.20."

"We look to a near-term range bound between 1.1720 and 1.1820."

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