EUR cheers German political developments – Scotiabank
|The Euro (EUR) is up an impressive 0.8% vs. the US Dollar (USD) and outperforming most of the G10 currencies with the exception of AUD and CHF, recovering its recent losses and pushing back toward last week’s highs, Scotiabank's Chief FX Strategist Shaun Osborne notes.
Near-term risk in EUR is being tilted to the downside
"Markets appear to be cheering news of an agreement to form a coalition government in Germany, however the price action in bonds has been somewhat muted by the broader tone with German bond yields down over 10pts at the short end. We still see near-term risk in EUR as being tilted to the downside, given the yawning gap between yield spreads (lower) and EUR (higher)."
"EUR’s latest gains appear to have faltered around the upper end of the recent range roughly bound between support just below 1.09 and resistance above 1.11. The RSI is leaning bullish, but only modestly so. We’d anticipate a break of 1.09 to find additional support in the 1.0750-1.0800 area."
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