The euro is consolidating in the mid to upper 1.16 range against the US dollar following robust German economic data releases, according to Scotiabank strategists Shaun Osborne and Eric Theoret. Stronger than expected IFO business climate figures and GDP numbers from Germany are expected to reinforce confidence at the European Central Bank ahead of its critical September 10 policy meeting. Despite the positive economic indicators supporting the single currency, Scotiabank warns that upside potential for EUR/USD remains capped above current levels, suggesting the pair is trading near or above fair value.
The data comes at a crucial juncture as traders position ahead of the ECB gathering, with Germany’s economic resilience potentially reducing pressure on policymakers to maintain ultra-accommodative monetary settings. EUR/USD traders should watch for consolidation rather than breakout momentum in the immediate term.
FXnCO Insight
Traders should consider taking profits on long EUR/USD positions near current levels as technical and fundamental resistance limits further gains before the September ECB meeting.
Source: FXStreet