EUR/USD: outlook still bearish - Scotiabank

Analysts at Scotiabank note that EUR/USD remains bearish on the basis of the diverging growth and monetary policy outlook between the Eurozone and the US and note that the USD is nearing a point in the calendar year where it typically trades higher.

Key quotes

“EUR/USD retains a slightly better offered undertone today though the market remains well-within recent ranges. European data reports were scant today but Italian consumer and manufacturing confidence readings for August disappointed expectations and the broader economic confidence reading dipped under 100 to 99.3, keeping this index pinned back to the lowest readings seen since early 2015.”

“We remain bearish on the broader outlook for EUR/USD on the basis of the diverging growth and monetary policy outlook between the Eurozone and the US and note that the USD is nearing a point in the calendar year where it typically trades higher.”

“EURUSD short-term technicals: (bearish) After a rather impressive push higher through early August, spot traded very heavy on Friday. At the very least, price action supports the impression of a broader, sideways range in place for EUR/USD.”

“Shorter-term price signals are bearish, however, and suggest risks are tilted towards a push lower early in the North American session. Look for more weakness below short-term retracement and longer-term MA support in the 1.55/0/70 region towards 1.1050.”