EUR/USD neutral-bullish near term – Scotiabank

Chief FX Strategist at Scotiabank Shaun Osborne stays neutral/bearish on the pair in the near term horizon.

Key Quotes

“EZUS 10Y spreads have compressed in recent weeks, supporting EURUSD gains, and the yield gap is holding near 182bps, the narrowest since Nov reached last week when EURUSD nosed through 1.14. Narrower spreads are supported by cautiously positive comments from ECB’s Praet (no “mission accomplished” but cyclical recovery looks “increasingly solid”) and will underpin EURUSD”.

“EURUSD dips remained relatively shallow, much as we expected, this week and the firmer undertone to price action over the past 24 hours suggests a more positive phase of market movement may be developing after the EUR’s recent consolidation. Sustained gains through short-term consolidation resistance at 1.1370 should see EURUSD gains extend. We continue to favour buying modest EURUSD dips with the bull trend well-entrenched on the longer run charts and oscillators”.