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In opinion of FX Strategists at Scotiabank, the pair outlook remains neutral/bullish in the near term horizon and believe a test of the vicinity of 1.1800 remains in the pipeline.

Key Quotes

“Measures of sentiment suggest a slight moderation in the premium for protection against EUR weakness. Yield spreads are relatively unchanged. Near-term risk lies with Fed Chairman Powell’s testimony and its impact on the broader tone. Final euro area CPI figures are scheduled for release on Wednesday and are expected to show a modest rise in headline inflation to 2.0% y/y”.

EUR remains well supported, extending its recent gains following the completion of a bullish hammer on Friday. We note the near-term importance of the 50 day MA and anticipate additional strength toward its early July high just below 1.18. Momentum signals are modestly bullish however trend strength indicators remain remarkably muted”.