EUR/USD further losses expected below 1.1170 – Scotiabank

Chief FX Strategist at Scotiabank Shaun Osborne noted the pair’s downside could gain traction on a break below 1.1170.

Key Quotes

“EURUSD’s failure to build on yesterday’s gains to the mid- 1.12s despite having the support of firm PMI data suggests that the recent rebound in the EUR may have run its course for now. ECB President Draghi speaks at 8.45ET and may push back a little more against the idea that policy makers are prepared to adjust their forward guidance next month. ECB VP Constancio remarked today that the ECB prefers to communicate policy guidance closer to the end of the year. EZ-US short-term spreads have widened out modestly against the EUR this morning and remain close to 200bps. We think much of the recent support for the EUR’s rebound has come from the relative out-performance of European stocks, however”.

“EURUSD’s loss of support in the low 1.12s yesterday tips the near-term balance of technical risks a little lower for spot now. Intraday support in the upper 1.11s has been quite firm and the EUR continues to enjoy a broad alignment of technically bullish trend momentum signals on the short, medium and longer run charts. This should mean that near -term downside risks are limited but weakness below 1.1170 in our session will likely see EUR losses extend somewhat”.