EUR/USD is consolidating, trading essentially flat on the day as markets await the Powell comments, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

The market consolidates this week’s gains through 1.11

“ECB Governor Kazaks commented on Thursday that he was ‘very much’ open to a rate cut in September but there was a debate about the size and pace of easing moving forward. Governor Vujcic said earlier today that “gradual” rate cuts were possible if the inflation outlook holds. ECB inflation expectations came in a tenth higher than forecast at to 2.8% and 2.4% for the 1Y and 3Y measures respectively.”

“There may be some tentative signs of softness creeping into EURUSD price action as the market consolidates this week’s gains through 1.11. The broader trend higher in the EUR remains strong but short-term oscillators are looking very stretched, which may signal potential for some further consolidation.”

“Intraday price trends suggest weakness back under 1.1095/00 may prompt more corrective, short-term EUR losses towards the low 1.10s.”