Significantly weaker than expected French and German Industrial Production data for July will lift concerns about the lack of momentum in the Eurozone economy but the data barely had an impact on the EUR which touched 1.1120 earlier before edging marginally lower, Scotiabank’s Chief FX Strategist Shaun Osborne notes.  

Renewed upside momentum in the EUR

“Lower USD yields and narrower EZ/US short-term spreads (2Y at –145bps) have provided the essential support for the EUR’s recent gains and the US rate outlook will continue to drive spot moves in the short run.”

“Spot gains through the low 1.11 zone is helping support renewed upside momentum in the EUR on the short-term chart and aligning the intraday DMI with the bullish orientation of the daily and weekly studies. The technical picture suggests limited downside potential for the EUR and keeps the broader outlook positive.”

“Resistance is 1.1200 but a weekly close above 1.1160 or so would be constructive from a technical point of view.”