EUR/USD upside scope limited - Scotiabank

There is no clear reason for EUR/USD’s gains over the past 24 hours other than position adjustment., according to Scotiabank Strategists. They expect gains to fade around the mid 1.09s.

Key Quotes

“Eurozone data reports reflected stronger consumer confidence in Germany and France but weaker than expected retail sales from Italy. The data had little or no impact on spot, however.”

“There is no clear reason for EURUSD’s gains over the past 24 hours other than position adjustment. Eurozone-US 2Y spreads are little changed and very comfortably USD-supportive at 149bps. Look to fade EUR strength to the mid 1.09s.”

“EURUSD short-term technicals: neutral/negative—EURUSD’s squeeze higher through the 1.09 area after testing the mid 1.08 zone yesterday may run a little higher still but the overall trend lower remains intact.”

“We see short-term trend channel, retracement, pivot and longer-term hi/lo resistance at 1.0950/55 and expect near-term gains to remain capped there. Above 1.0950 on a sustained basis could see EURUSD push back towards 1.11 from a technical point of view. “