EUR/USD keeps the bullish stance – Scotiabank
|Eric Theoret, FX Strategist at Scotiabank, noted spot clings to the bullish outlook for the time being.
Key Quotes
“Relative central bank policy favors EUR strength as interest rate differentials narrow on the back of firming expectations for ECB policy normalization and fading expectations for near-term Fed tightening. Headline risk is elevated into next Thursday’s ECB meeting given the policymakers’ tendency to signal possible policy/ tone changes via unattributed comments to media. Specifically, uncertainty surrounds potential changes to the press conference introductory statement passage ‘we stand ready to increase our asset purchase programme in terms of size and/or duration’. An adjustment would open up the risk of a taper in either September or December”.
“Momentum signals are moderately bullish, DMI’s are providing confirmation, and the ADX trend strength indicator is firming”.
“The mid-1.14 area remains crucial for this week’s close as it roughly corresponds to the descending trend line from the 2015-2016 highs. A close above would open up the risk of sustained EUR gains toward 1.17”.
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