EUR/USD: fundamentally vulnerable to the downside - Scotiabank

Ani Salama FXStreet

Shaun Osborne, Strategist at Scotiabank notes that EUR/USD is fundamentally vulnerable to the downside and expect firm resistance in the upper 1.12s. He therefore, favours using short-term EUR rallies as a selling opportunity.

Key Quotes

“We continue to note two distinct negative for the EUR – wide, short-term Eurozone-US interest rate spreads (145bps at the 2Y sector of the curve) and the continued pressure on Eurozone bank shares – that could yet trip the EUR up (impact on Merkel government and broader political situation) and should certainly suggest limited upside potential for the EUR in the near-term at the very least.”

“We think EUR/USD is fundamentally vulnerable to the downside and expect firm resistance in the upper 1.12s.”

“EURUSD short-term technicals: neutral/negative—EURUSD is showing little sign of weakness or vulnerability on the charts. Intraday price action looks firm, in fact, even if the market remains resolutely range bound.”

“We note strong, long-term resistance overhead at 1.1275/80, however, and rather favour using short-term EUR rallies as a selling opportunity.”

Author

Ani Salama

FXStreet

Ani Salama is an Economist specialized in financial markets and statistics analysis. In 2010, she joined FXstreet where she now contributes with the news section.

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