EUR/USD remains bullish/neutral near term – Scotiabank

Eric Theoret, FX Strategist at Scotiabank, noted the pair’s outlook remains on the bullish side ahead of the key ECB meeting tomorrow.

Key Quotes

“Market participants are assessing the risks into the ECB policy decision as policymakers lay the groundwork for a much-anticipated September taper. The introductory statement tone is expected to see the removal of an easing bias to the asset purchase programme. ECB staff are also rumored to be examining several scenarios in anticipation of the September taper including an extension of asset purchases at a reduced pace. Such an outcome would present downside risk for EUR on the basis of spreads given the ECB’s policy sequencing and forward guidance on rates (‘at their present levels for an extended period of time, and well past the horizon of our net asset purchases’)”.

“Momentum indicators are showing signs of negative divergence and failing to confirm the fresh highs in spot. However, trend strength is elevated and rising. Near term resistance levels are limited above 1.1580, and we highlight the May 2016 intraday high at 1.1616 and August 2015 high at 1.1714. Near-term support is expected between 1.1480 and 1.1450”.