Euro (EUR) traded subdued in absence of fresh catalyst. CPI picked up to 2.2% y/y but well within consensus. Pair was last at 1.1752 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
Broader fundamental outlook remains supportive
« Earlier comments from ECB officials may have tempered expectations. Lagarde said the inflation risks are quite contained in both directions. She also indicated that we are in a good place but that place is not fixed. Our house view believes that ECB rate cut cycle is nearing its end. »
« Mild bearish momentum on daily chart shows tentative signs of fading while RSI was flat. 2-way trades still likely, within recent range. Immediate resistance here at 1.1810 and 1,1920 levels (2025 high). Support at 1.1640/70 levels (50 DMA, 23.6% fibo retracement of Mar low to Sep high), 1.16 (100 DMA) and 1.1460 (38.2% fibo). »
« New French PM Sebastien Lecornu has ruled out wealth tax, aims to cut budget deficit to 4.7% of GDP in attempt to get budget 2026 by early Oct. It remains early to concur if he can turn things, but early polls show he only has a positive opinion of 16%. Additionally, the Netherlands will hold General Elections on October 29. These political developments may still pose short-term downward risk on the euro. However, the broader fundamental outlook remains supportive of the euro, suggesting a buy-on-dips approach.
