EUR underperforms, falls below 1.11 – Scotiabank

Weak German regional CPI readings in August alerted markets to the risk of national data (8.00ET) beating expectations (unchanged M/M and 2.1% Y/Y, down from 2.3% in July), notes Shaun Osborne, chief FX strategist at Scotiabank. .

Weak German regional CPI data disappoints

“The soft data weighed on Eurozone short rates (compressing EZ/US 2Y spreads somewhat) and drove the EUR back into the 1.11 area before the spot settled.”

“The euro’s softer tone, evident this week, broke below short-term support (the August rally trend) at 1.1100 today.”

“Euro losses show no signs of extending below the figure at this point, but the soft undertone could extend into the mid-1.10s unless the euro can regain 1.11+ in fairly quick order .”