EUR/USD downside alleviated above 1.1675/85 – Scotiabank

Shaun Osborne, Chief FX Strategist at Scotiabank, noted the pair faces a significant up barrier in the 1.1675/85 band.

Key Quotes

“This morning’s data reports from the Eurozone highlighted the fundamental challenges for the economy in a nutshell. Eurozone GDP rose 2.5% Y/Y in Q3, above Q2 and above expectations for the strongest growth since 2010 while unemployment dipped to 8.9%, the lowest since 2009. However, inflation slowed unexpectedly, with headline CPI dipping to 1.4% and core inflation falling under 1% to 0.9% Y/Y. With price stability still not assured, despite the economy’s apparently strengthening momentum, the ECB has little choice but to maintain policy accommodation”.

“EURUSD traded poorly last week, breaking under the 100-day MA support (1.1687) and noted trend support (1.1675) which also figures as the neckline of a H&S top. The lack of follow through selling interest on the break under support in the upper 1.16s leaves the EUR looking a little lost, however, especially after a decent bid emerged for the EUR yesterday. EURUSD may be able to retest the upper 1.16s in the near term but spot will need to retake and hold the 1.1675/85 area if it is to avoid more losses in the coming weeks”.