EUR soft but in range as markets digest disappointing PMIs/stronger IFO – Scotiabank

Euro (EUR) is entering Thursday’s NA session with a 0.3% decline against the US Dollar (USD) and underperforming most of the G10 currencies with the exception of SEK and NZD, Scotiabank's Chief FX Strategist Shaun Osborne notes.

ECB messaging remains dovish

"The latest round of preliminary PMIs were generally disappointing with contractionary (sub-50) prints for the euro zone, Germany, and France. Germany’s IFO sentiment offered a somewhat better read, improving and surprising on the both the business climate (current) and expectations sub -components."

"On trade, US/EU talks have not yet begun but the EU is said to have sent a revised proposal to Washington, which includes a reduction of tariffs on non-sensitive agricultural products and industrial goods. ECB messaging remains dovish as policymakers maintain a bias to a June cut while discussing the extent of further easing by year-end."

"The medium-term trend remains bullish, given the sequence of higher lows and higher highs since February. The mid-May low, bouncing off of support around the 50-day MA (1.1141 currently, 1.11 at the time) was important in cementing the bull trend. Near-term resistance is limited ahead of 1.15 and near-term support is expected below 1.12."