EUR/USD to extend its decline as widespread lockdowns in Europe loom – Scotiabank

EUR/USD is underperforming its major peers on Monday as selling emerges above 1.13. Economists at Scotiabank expect the world’s most popular currency pair to continue losing  bullish momentum.

Imposition of new limits to contain new covid variant are likely 

“The Eurozone, and the EUR, remain at risk of a tightening of restrictions in the coming weeks as contagions surge – even prior to the arrival of the new more contagious variant.”

“The longer-run EUR picture remains negative and the currency’s failure to hold above 1.13 is an initial suggestion that the EUR downtrend will resume in the days ahead.”

“Support is the overnight low of 1.1260 (the mid-figure zone more broadly) followed by 1.1230 and then the figure area. Resistance is 1.1300/10 and the Friday high of 1.1331.” 

“We maintain a bearish view on the EUR toward the 1.10/1.11 zone amid very dovish ECB settings and elevated odds of widespread lockdowns in the continent.”