The Euro (EUR) is soft, down a marginal 0.1% against the US Dollar (USD) as it underperforms most of the G10 currencies along with the CAD and CHF, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Candle formations hint to uncertainty

"The final euro area mfg PMI was slightly better than expected (49.8 vs. 49.5 exp.) and the preliminary euro area CPI release was in line with expectations at 2.2% y/y on headline and 2.3% y/y on core. EUR fundamentals remain supportive as we note the renewed rise in Germany-US yield spreads, and sentiment is providing an added boost as the options market prices a greater premium for protection against EUR strength."

"French political developments have been limited as we continue to look for any progress on the new PM’s. The EUR looks to have settled into an incredibly tight consolidation range in the mid/lower-1.17s, delivering a pair of doji’s over the past two sessions."

"The candle formations hint to uncertainty (when found in a range) and add to the lack of direction provided by an RSI reading at 50. We are somewhat heartened by the prior break of the descending trend line drawn from the descending July highs and see little in terms of resistance ahead of 1.18 and the mid-September high just above 1.19. We look to a near-term range bound between 1.1680 and 1.1780."