EUR/USD: Additional strength towards 1.0950/80 possible – Scotiabank
The Euro (EUR) retains a firm undertone. Minor dips to the upper 1.08s were well-supported in overnight trade and spot has regained the low 1.09 area fairly easily through European trade to trade to a marginal new, short-term high (highest since March), Scotiabank’s chief FX strategist Shaun Osborne notes.
Scope for additional leap higher towards 1.0950/80
“Significantly narrower EZ/US spreads—the 2Y gap has narrowed to –162bps, the narrowest since March—plus some normalization in OAT/Bund 10Y spreads explain the EUR’s strong performance over the past few weeks. Our fair value estimate suggests 1.10+ may be reachable in the short run. No change in rates is expected at Thursday’s ECB policy decision.”
“EUR has built up a fairly strong head of technical steam. Price is trading at a marginal new high for the move up this morning and spot gains are strongly backed by bullish-leaning trend strength indicators on the intraday, daily and weekly DMIs.”
“This should mean pressure for more gains and limited scope for EUR corrections, for now. Gains through the low 1.09s target additional strength towards 1.0950/80. Support is 1.0860/80.”
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FXStreet Insights Team
FXStreet
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