EUR/USD neutral short-term – Scotiabank

Chief FX Strategist at Scotiabank Shaun Osborne noted the neutral stance on the pair in the near term.

Key Quotes

“Some bargain hunting buying appears to have emerged overnight to prop up the EUR but with no data to trade off of and the focus on the UK, movement has been limited. We still rather view EURUSD as fundamentally “rich”, given still wide, short-term yield spreads in the USD’s favour (+133bps at the 2Y tenor). Our fair value model still suggests a significant over-valuation in spot and we expect near-term (UK-inspired relief rally) gains to stall around 1.15”.

“Spot is chopping around the 50-day MA in rather directionless trade. Short-term price patterns look somewhat supportive and suggest an upside lilt to the market but there is not much momentum behind the gains and we see minor resistance around 1.1315/20 which may cap on the day. We see support at 1.1250. We think a move either side of 1.1150 or 1.1350 roughly in the next two days will determine the next 150bps of movement”.