The Euro (EUR) is entering Thursday’s NA session with a modest 0.2% gain as it trades with modest support into the mid-1.17 area, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

ECB messaging remains neutral

"The outlook for relative central bank policy is shifting favourably for the EUR as yield spreads retrace their recent pullback and threaten a push to fresh highs. Euro area rate expectations are steady however the Fed outlook remains in flux post-ADP. Comments from ECB GC member Kazaks are confirming the central bank’s neutral bias, stating that current policy rates are ‘very appropriate’ in the absence of shocks."

"In France, progress on PM Lecornu’s budget proposal is negligible, and unions are holding a new round of protests against austerity. France’s 10Y yield has fallen marginally below Italy’s, and the France-Germany spread also looks to have stabilized following its recent push to a fresh multi-month high above 80bpts."

"The technical picture is largely neutral with an RSI just above the 50 threshold. However, the EUR appears to be trading with modest support and we find reassurance in its recent push back above the descending trend line drawn from the July highs. Near-term resistance is limited ahead of 1.1820 and the recent multi-year highs above 1.19. We look to a near-term range bound between 1.1720 and 1.1820."