The Euro (EUR) is entering Tuesday’s NA session flat to the US Dollar (USD) as it extends its tight consolidation for a fourth consecutive session and trades within a remarkably narrow range in the mid-1.16s, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

German trade data mixed as weak imports weigh on demand

"Fundamental releases have been limited to mixed trade figures from Germany, where a stronger trade balance was flattered by unexpected weakness in imports (signaling weaker internal demand). Rate expectations are showing signs of stabilization following their recent upward adjustment, reflecting renewed hawkishness from key policymakers at the ECB."

"The shift in rate expectations has lifted yield spreads and pulled them to fresh highs at levels last (briefly) seen in September 2024. Measures of sentiment are confirming the moves in spot, and the EUR’s correlation to risk reversals is elevated."

"The RSI is steady in the upper 50s, reflecting bullish momentum as the EUR consolidates its recent break above the 50 day MA (1.1607) trend level. The local range has been broken – to the upside – but follow through has been lacking as we await a push to the lower 1.17 area. We see little meaningful resistance ahead of 1.18 and look to a near-term range bound between 1.16 and 1.17."