EUR trading defensively, despite better data and supportive spreads – Scotiabank
The Euro (EUR) is trading somewhat defensively into Wednesday’s NA session, ignoring the release of stronger than expected data with a modest surprise to euro area confidence figures and the Q2 GDP print, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.
The EUR trend is bearish
"The EUR has traded poorly in the aftermath of the US/EU trade deal, reflecting a shift in sentiment with a notable erosion in the option market’s premium for protection against EUR upside."
"The EUR is vulnerable from a sentiment and positioning perspective, as CFTC data reveal a sizeable bullish position among the speculative community. Fundamentals remain supportive for the EUR however, as the outlook for relative central bank policy favors a narrowing in deeply negative German-US yield spreads."
"The trend is bearish following Tuesday’s break of the 50 day MA (1.0932) trend support level. The RSI is now clearly below 50 and pushing toward 40, signaling bearishness. We look to additional support in the mid-1.14s and see the near-term range bound between 1.15 support and 1.16 resistance."
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FXStreet Insights Team
FXStreet
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