Euro Is Underperforming

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Euro Is Underperforming

Euro Is Underperforming Against G10 - Scotiabank

report from Scotiabank's FX strategist says that the Euro currency is underperforming against the G10 currencies. They believe that it's due to the softer data from Europe, which has put pressure on the shared currency.

The recent data from Germany was weak and included the PPI print and retail sales. In addition, the data coming from France was also mostly mixed, which shows that the Eurozone economies are struggling.

French Economy Struggles With Political Uncertainty

If we look at France's situation in particular, it has been going through political uncertainty for some time now. The public is not happy with all the austerity measures and the spending cuts. So, that's also something which is weighing heavily on the Euro.

But for now, the French bond yields are still doing a little better than the Italian bond yields. So, there's that, but we must also consider the fact that France is a very big economy, and a comparison like this doesn't make sense.

Amidst all of this, another factor that is putting pressure on the Euro is the interest rate difference. Especially with the interest rate situation in the USA, the Euro is losing strength.

With all things considered, it seems the next stop for the EUR/USD pair will be 1.16 during the next 1-3 months. As for the support levels, the 1.16 and then the 1.15 will remain relevant during the last quarter of 2025.

Similarly, the most relevant resistance levels for the EUR/USD are around 1.20 and then 1.22. But given the current weakness in the Euro, the chances of a strong pullback are very low.

That's why there's a good chance that EUR/USD will head towards its support levels as compared to the resistance levels. Meanwhile, the interest rate difference will also continue to be a driving force for the EUR/USD pair.

However, a sharp decline in the US interest rate could trigger some heavy buying in the EUR/USD pair. But, it seems that the Fed is highly likely to stay on track with its policy of small but gradual rate cuts.

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