The Euro (EUR) is quietly consolidating in the upper 1.14s and entering Wednesday’s NA session flat against the US Dollar (USD), Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

EUR is consolidating in upper 1.14s

"The final euro area services and composite PMI’s offered modest upside surprises from the preliminaries while still remaining in the low-growth range just above 50. Germany’s readings were slightly stronger in the mid-50s while France’s remained in contraction – likely as a result of ongoing political uncertainty in the country."

"Fundamentals remain an important driver for the EUR, though yield spreads do not appear to be completely responsible for the latest pullback from the mid/ upper-1.16s. Short-term correlation studies reveal a persistently strong relationship between the EUR and measures of sentiment (risk reversals) suggesting that markets remain sensitive to broader trends and themes."

"The RSI remains deeply bearish in the low 30s just above the oversold threshold at 30. The trend remains neutral however, as reflected in the flattening of the 50 day MA and the flat range since June. Shortterm bearish momentum looks to be stalling out in the upper 1.14s and we look to a near-term range bound between 1.1450 and 1.1550."