EUR/USD neutral-bearish near term – Scotiabank

The outlook on EUR/USD remains neutral/bearish in the short term, according to FX Strategist at Scotiabank Eric Theoret.

Key Quotes

“The broader tone is dominant, and considerations of relative central bank policy are delivering added pressure as market participants respond to dovish comments from ECB policymaker and chief economist Praet”.

“The 2Y Germany-U.S. yield spread has widened to fresh lows, approaching -150bpts at levels last seen in 2006. Measures of implied EUR volatility are slowly moving higher, pushing up the premium for protection against downside risk. EUR appears vulnerable to a bearish resolution of its recent technical formation”.

“EUR has tested fresh two week lows around 1.1150 and appears vulnerable following its break through the 50 day MA (1.1202) and 100 day MA’s (1.1182) with the potential for a sustained break through the 200 day MA (1.1163). Risk for EUR lies in the lower 1.11s around the lower end of its multi-month triangular consolidation. Trend and momentum signals are muted.”