EUR/USD neutral near term – Scotiabank

In view of FX Strategist at Scotiabank Eric Theoret, the near term perspective of the pair stays on the neutral side.

Key Quotes

“Fundamental releases have been limited and all eyes are on Thursday’s ECB as market participants assess the risks surrounding the press conference and statement tone following the results of the first round of the French presidential election”.

“No policy changes are expected, and media reports suggest that unidentified ECB officials have sought to dampen any risk of a tone shift ahead of the June meeting. Core CPI remains remarkably subdued”.

“The 2Y Germany-U.S. spread has shown signs of a renewed widening, pushing back toward –200bpts. Measures of implied volatility are low, and risk reversals hint to an ongoing moderation in the premium for protection against EUR weakness”.

“The past 24 hours have delivered resistance in the 1.0950 area, and EUR’s subsequent retreat back below 1.09 is suggestive of a potential near-term consolidation”.

“The broader trend from December is bullish with a sequence of higher lows and higher highs, forming an ascending channel whose bounds are suggestive of support in the low 1.06s and resistance around 1.10. Near-term support is expected at the 200 day MA (1.0837)”.