In opinion of FX Strategists at Scotiabank, the pair’s stance remains constructive in the short-term horizon.
“EURUSD tested the low 1.24 area overnight but the market did not have quite the conviction to push on and the EUR traded lower following the release of the Apr ZEW survey; the current conditions missed consensus expectations of 88 by a fraction (87.9) but the expectations index weakened more obviously to -8.2 from 5.1 in Mar (and against forecasts of -1.0). Recent trade concerns appear to be weighing on sentiment to extend the run of below consensus Eurozone data outcomes recently. However, we expect solid European growth moving forward and we continue to expect the EUR to remain well-supported on dips”.
“Technical signals are mixed this morning; spot traded back from the earlier highs quite aggressively on the charts, forming clear reversals on the 1- and 6-hour charts. But the broader technical undertone her remains constructive from our perspective and we look for the EUR to remain well underpinned on modest dips. We see support on weakness to 1.2320/25 and spot key resistance still at 1.2430 (weekly bull break out)”.
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