The Euro (EUR) is a little softer but is holding recent trading ranges against the USD, Scotiabank’s Chief FX Strategist Shaun Osborne notes.  

EUR soft but holds range

“Germany’s IFO and ZEW surveys were released earlier. The Ifo survey reflected weaker business confidence this month at 84.7, down from 85.6, with activity in the manufacturing and service sectors deteriorating.”

“The ZEW survey of investor confidence reflected a jump in expectations, perhaps reflecting hopes that the recent unsettled political backdrop will be resolved by new elections in February. Wider 2Y EZ/US spreads (-222bps for 2Y cash bonds) are keeping the EUR tone defensive.

“The EUR has yielded minor gains through the low 1.05 area made late yesterday very easily. Spot remains within the recent trading range, but the EUR’s undertone remains soft and trend oscillators are aligned bearishly across the short-, medium– and long-term oscillators. This will tend to limit the EUR’s ability to rally (to the low/mid 1.05s) and maintain focus on testing support (1.0450).”