EUR/USD bearish with year-end target of 1.05 - Scotiabank

Eric Theoret, Strategist at Scotiabank notes that EUR/USD holds a bearish bias, and highlights the absence of any meaningful support under the lower 1.07s, so a break of this latter would shift the focus to the December 2015 low at 1.0524.

Key Quotes

“EUR is down, a mid-performer among its G4 peers and a relative underperformer among the G10, weakening in this environment of broad-based USD strength. Widening interest rate differentials are pulling EUR lower, to levels last seen in January 2016, and the Germany-U.S. 2Y spread is approaching -160bpts at levels last seen in July 2006.” 

“We remain bearish EUR on the basis of relative central bank policy and hold a year-end target of 1.05.”

“EURUSD short-term technicals: bearish—EUR is under pressure, weakening for a sixth consecutive session as it breaks to levels last seen in January. Momentum signals are bearish and DMI’s appear poised to provide imminent confirmation. We highlight the absence of any meaningful support under the lower 1.07s, a break of which would shift the focus to the December 2015 low at 1.0524.”