EUR/USD neutral/bearish near term – Scotiabank

FX Strategist at Scotiabank Shaun Osborne expects the downtrend to resume unless spot manages to break above 1.0600 on a sustainable fashion.

Key Quotes

“ECB policy normalization is a long way off whereas the Fed process is expected to take another big step forward next week. EURUSD gains peaked around expected resistance in the low 1.06s and we still think the EUR is a fundamental sell on the policy divergence narrative”.

“EURUSD looks better supported on the short-term charts though the noted resistance zone (where the 50 and 55-day MA signals are clustering) between 1.0620/40 continues to cap gains. Short-term trends look relatively firm and the market appears keen to pick up EURs on minor dips. We still rather prefer the short side of this trade, however. Trend signals are weak on the longer run studies but the accumulation of technical evidence suggests to us that unless the EUR can break – decisively – above the low 1.06 zone, the broader trend lower will resume”.