EUR keeps afloat amid ECB comments – Scotiabank

European Central Bank (ECB) policymakers indicated that the French situation is “contained”, allowing the Euro (EUR) to float above 1.07, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR holds a steady grip over 1.07

“ECB policymakers indicated last week that the risks around French situation were 'contained' while the National Rally’s Le Pen commented that her party would co-operate with President Macron if her group won the election. Soothing comments have allowed the 1-Y OAT/Bund spread to narrow marginally from last week’s peak, allowing the EUR to steady above 1.07.”

“EUR gains from last Friday’s low have developed slowly in overnight trade. The rebound may have some legs in our session but, at the moment, gains look more like a brief consolidation ahead of renewed weakness.”

“EUR losses did stabilize around the 76.4% retracement of the April/May rally at 1.0675 last week, however, so the potential for a deeper rebound cannot be ignored. But spot remains well below levels that would confer any real technical strength on the EUR I think (above 1.0850 is needed to lift the EUR’s technical prospects at this point).”