The Euro (EUR) is up a modest 0.2% vs. the US Dollar (USD), consolidating around 1.16 and threatening a break of its recent multi-year high, Scotiabank's Chief FX Strategists Shaun Osborne EUR and Eric Theoret report.

EUR is threatening fresh multi-year high

"Fundamentals are once again shifting positively for the EUR, as yield spreads offer support on the back of a fade in easing expectations at the ECB and a renewed pricing of cuts from the Fed. Germany’s IFO business sentiment figures were largely in line with expectations, offering little in terms of near-term price action."

"The EUR’s primary near-term drivers will remain the broader market’s tone (geopolitics) and the outlook for relative central bank policy. Monday’s recovery was impressive, as the bullish outside day provided for a meaningful recovery from the mid-1.14s toward the mid -June (multi-year) high around 1.16."

"Momentum is once again firmly bullish, with an RSI back in the mid-60s (64). We continue to highlight the importance of the 50 day MA (1.1372) as a level of medium-term support. The near-term range is likely to be defined by support in the low 1.15s and resistance above 1.1620. Additional resistance is limited ahead of the 1.1680-1.1700 area."