EUR/USD neutral to bearish short term – Scotiabank

Shaun Osborne, Chief FX Strategist at Scotiabank, noted the neutral/bearish outlook on the pair in the near term.

Key Quotes

“The EUR retains a soft undertone, with EZ-US short-term spreads remaining near recent (multi-year) highs; we think the USD’s yield premium (around 145bps at the 2Y sector of the curve) constitutes a strong source of support. Markets remain somewhat reluctant to extend positioning – perhaps until the Fed’s policy outlook is a little more definitive”.

“The EUR’s technical undertone remains negative but short-term price action suggests market participants are reluctant to extend the EUR decline at the moment. Intraday price signals suggest the EURUSD slide risks stalling intraday. Trend strength oscillators are aligned bearishly, however, which should mean limited scope for EUR gains near term”.