EUR/USD neutral in the short-term – Scotiabank

Chief FX Strategist at Scotiabank Eric Theoret noted the pair’s stance remains on the neutral side, although further weakness is not ruled out.

Key Quotes

“There is little notable change in the near-term EURUSD condition. The spot market has trading in a band of +/- 1.5% (roughly) around 1.12 since the start of August and has been stuck to a range of +/- 5% around the 200-day MA since the start of the year”.

“We still rather think the downside is the weaker side to the market and rather think investors are tilting towards a more bearish assessment of prospects in the near-term, considering wide (and ordinarily USD-supportive) short-term yield differentials (142bps at the 2-year sector of the curve – the USD’s biggest yield advantage over the EUR since 2016)”.

“There is really little to tease out of the short-term charts; EURUSD looks well-supported near 1.1200 currently, and well-offered around 1.1260/70. Short-term trend strength signals are neutral, longer-term signals are constructive but there is little sign of impending strength in this market. Key support is 1.1140/50 and key resistance stands at the recent high of 1.1325”.