EUR extends gains through low 1.04s – Scotiabank
|The Euro (EUR) has managed to push a little more decisively through the low 1.04 area overnight, with the help of easing, for now, tariff concerns and firmer than forecast PMI data, reflecting solid, German Services data, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
EZ PMIs and narrower spreads help Euro gains
“Eurozone Manufacturing PMI rose a point to 46.1 while Services eased fractionally to 51.4 in January, driving the Composite index to 50.2. EUR gains are supported by narrower, though still significant, spreads. The 2Y cash bond spread has narrowed to –198bps, the narrowest since early November, helping pull spot a little closer to fair value (1.0592, by our measure).”
“Spot nosed above 1.05 earlier before drifting back slightly but the key—technical—point here is that solid EUR gains on the week are (finally, it would seem) settling more clearly above the low 1.04 area that has capped recent gains and also represents the initial Fibonacci retracement resistance from the EUR’s drop from 1.12.”
“The next retracement target is 1.0574 (38.2%), with the low 1.06 area also likely to represent firm resistance.”
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