EUR/USD keeps the neutral/bearish stance – Scotiabank

According to Shaun Osborne, Chief FX Strategist at Scotiabank, the pair faces further downside on a daily close below 1.0675.

Key Quotes

“Weaker peripheral bonds (EU negotiators warned Greece that “time was running out” over talks regarding additional aid payments) and focus on French election risks remain negative background factors for the EUR but renewed, if moderate, widening in rate differentials between the Eurozone and the US this week (2Y spreads moving from -184bps Monday to -188bps now) constitute the EUR’s primary handicap, we feel”.

“EURUSD traded lower more or less in line with our expectations Thursday after the market dipped under support in the low 1.07 area. Patterns are a little mixed now, however; intraday signals suggest firm support at 1.0655/60 and the EUR risks squeezing higher through the balance of the session if spot can break back above 1.0705. However the daily chart shows spot pressuring trend support off the early January low and loss of daily support at 1.0675 could see broader EUR losses resume”.