EUR/USD maintains neutral tone - Scotiabank

Shaun Osborne, analyst at Scotiabank, noted that EUR/USD price action has not developed on the downside in the way they thought likely through late July, leaving spot looking somewhat neutral again on the short-term chart.

Key Quotes

“EURUSD tested 1.12 but the market is showing little sign of wanting to extend EUR gains through the figure at this point. US yields have backtracked at the short-end of the curve in the aftermath of the Q2 GDP disappointment but we note that spreads remain wide and in favour of the USD around +130bps. We think the EUR will struggle to gain while rate differentials remain such a drag.”

“EURUSD short-term technicals: neutral, bearish—Price action has not developed on the downside in the way we thought likely through late July, leaving spot looking somewhat neutral again on the short-term chart.”

“A strong rebound in the market last week may prompt further gains in the EUR near-term (spot is trading above the 50-day MA today) towards 1.1245/50. This is the breakdown point (resistance) of the upward-sloping channel that guided price through H1 and should represent strong resistance in the longer run.”