The Euro (EUR) is quietly consolidating its recent gains and trading at fresh one month highs vs. the US Dollar (USD), Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

EUR is currently supported by Fed/ECB outlook

"The EUR appears poised for a breakout to fresh multi-year highs, supported by fundamentals and a continued rise in yield spreads as markets price in an outlook for relative central bank policy that includes and increasingly dovish Fed and a decidedly neutral ECB. Thursday’s ECB decision is expected to deliver a widely expected hold, and a pushback on market pricing of additional cuts would lend the EUR fundamental support."

"In terms of overnight data, French industrial production figures were better than expected. In politics, the French confidence vote was something of a non -event and a meaningful EUR reaction has yet to be seen. The French-German 10Y spread is once again rising and the France-Italy spread is now at zero. President Macron is expected to appoint a new PM in the coming days, however France’s political and fiscal troubles are likely to remain unresolved in the near term."

"The EUR’s technical outlook is looking increasingly bullish following Monday’s break above descending resistance drawn from the July highs. The latest runup has delivered a push to fresh local highs, offering little in terms of resistance ahead of the 1.1829 multi-year high reached on July 1st. The RSI is bullish, and climbing, suggesting building momentum. We look to a near-term range bound between 1.1700 and 1.1800."