EUR/USD in consolidation mode  - Scotiabank

Shaun Osborne, Strategist at Scotiabank noted that technical perspective remains neutral to bearish as the market remains in consolidation mode with little sign that the market really wants to lift EUR/USD significantly.

Key Quotes

“EURUSD is little changed on the session. There were no European data releases of note this morning and spot is perhaps constrained by the desire to reduce USD long positioning on the one hand and the fact that there are significant EURUSD expiries tomorrow (over USD4 bn) pinned at 1.0600/1.0650 (just under USD3bn at the latter level) on the other.”

“Eurozone-US rate spreads remain clearly EUR-negative, with 2-year differentials reaching -180bps today – the widest yield premium for the USD in at least 10 years. We spot EURUSD fair value based on spreads and relative equity returns at 1.01 today.”

“EURUSD short-term technicals: neutral/bearish – The market remains in consolidation mode. EURUSD gains extended modestly overnight and we see intraday support at 1.0600/05. But there is little sign that the market really wants to lift the EUR significantly at this point. The broader technical trend remains lower and bearish trend strength is developing on the longer-term studies. We see scope for EURUSUD to push up to 1.0645/65 intraday but little more. Look to fade broader EURUSD rallies.”