EUR/USD stays bearish near term – Scotiabank

In view of FX Strategists at UOB Group, the pair’s outlooks is still biased towards the bearish side in the short-term horizon.

Key Quotes

“Eurozone final headline CPI for Jun was left unrevised at 2.0% Y/Y but the core figure was trimmed a tenth from the preliminary report to +0.9% Y/Y – and down from 1.1% Y/Y in May. Energy prices helped support headline price gains but services sector prices – a measure of domestically generated inflation rose 1.3% Y/Y, down from 1.6% in May. We continue to believe that the ECB is preparing to wind down and end its asset purchases this year but stubbornly soft inflation trends in the Eurozone undermine confidence in the scope for eventual rate rises. Eurozone-US 2-Y spreads remain wide at 324bps. The USD’s positive carry will protect it from depreciation pressures for the moment”.

“EURUSD slumped sharply yesterday, forming a bearish outside range session on the daily chart. The import of these sorts of signals is perhaps muted in rangey, sideways trading but the price action reaffirms the lack of topside traction for the EUR above 1.1750 at the moment and suggests some risk of a retest of the recent range lows at 1.1510”.