EUR/USD cautious, could test 1.1230 – Scotiabank

Eric Theoret, FX Strategist at Scotiabank, noted the bullish albeit cautious outlook on the pair in the short term.

Key Quotes

“EUR is steady, consolidating in a tight range around Tuesday’s close, outperforming most of the G10 currencies in an environment of broad-based USD strength”.

“Yields spreads are widening in a EUR-negative manner, the Germany-U.S. spread widening out beyond -137bpts to reach levels last seen in early June. The passing of Fed risk will shift the focus back to the ECB, with its minutes set for release on Thursday”.

“EUR has struggled to maintain its recent gains above 1.1280. As with USDCAD, the 2 hour chart suggests a three candle reversal (in this case an evening star, see bottom chart) around Tuesday’s NA open. We look to resistance at 1.1280 and highlight the potential for a decline back to the 100 day MA at 1.1229”.