EUR is well supported for the time being – Scotiabank

FXStreet Insights Team FXStreet

The Euro (EUR) is up marginally against the US Dollar (USD) and looking well supported as it seeks to extend its latest recovery following the pullback from its July 1 high, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

EUR is facing renewed bull trend into Thursday’s ECB

"There have been no major overnight data releases and all eyes remain centered on Thursday’s ECB where markets are pricing a widely expected hold. The near-term risk lies with the ECB’s communication around its rate outlook, given that recent messaging has been largely neutral and creating a sharp contrast to rates markets that continue to price about one full 25bpt rate cut by December."

"An erosion of the market’s dovish bias should lend the EUR some fundamental support via spreads. In terms of sentiment, the options market is bullish and widening the premium for protection against EUR upside. In terms of positioning, the CFTC net long is extending its push to the upper end of its historical range."

"The short-term price action has turned much more constructive following the recent pullback from the July 1 high. The push above 1.17 is important, and an extension of gains should pave the way for a resumption of the medium-term bull trend from the February low. The RSI is looking comfortable in bullish territory (back above the 50 threshold) and we look to a nearterm range bound between 1.1650 support and 1.1750 resistance."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.