EUR/USD appears set to resolve its technical consolidation with a downside break - Scotiabank

Eric Theoret, Strategist at Scotiabank notes the EUR/USD appears set to resolve its technical consolidation with a downside break.

Key Quotes

“EUR is soft, trading below 1.12 in an environment of broad-based USD strength, ignoring the release of stronger German factory orders data with a focus on relative central bank policy. The 2Y Germany-U.S. yield spread continues to widen in a EUR-negative manner, pushing decade lows beyond -150bpts and leaving EUR vulnerable to further weakness. Measures of sentiment are bearish and EUR appears set to resolve its technical consolidation with a downside break.”

“EURUSD short-term technicals: neutral-bearish—EUR appears to be attempting a renewed break through the cluster of longer-term moving averages just below current levels, trading through the 50 day MA (1.1208) and testing the 100 day MA (1.1182) with risk to the 200 day MA at 1.1166. A decline to the low 1.11’s would threaten the lower bound of the multi-month triangle, opening up the risk of further weakness toward 1.1080, 1.10, and the late July low around 1.0950.”