FX Strategists at Scotiabank remain bearish on the pair while a test of the 1.2200 area is not ruled out.
Key Quotes
“Germany’s ZEW survey showed investor sentiment dropping in February in the wake of the recent market volatility. The current situation index dipped to 92.3, from 95.2 in Jan, while the expectations index also weakened – but by less than forecast – to 17.8 this month, from 20.4 in Jan. The current situation index suggests the economy retains solidly positive momentum and the index does not really dampen the near-term outlook for growth”.
“It’s hard to characterize price action as anything other than bearish for spot; Friday’s tumble in the EUR formed a bearish key reversal signal on the daily chart, with the EUR struggling for a third time over the past month to hold 1.25+ levels. Losses have extended to leave spot vulnerable to a test of the 1.2207 low from the start of the month – which effectively represents a double top trigger (potentially signalling extended weakness back to the 1.19 area if broken conclusively). We see intraday resistance at 1.2370 and minor support near current levels (1.2335)”.
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