EUR/USD keeps the neutral/bearish outlook near term – Scotiabank

According to FX Strategists at Scotiabank, the pair is expected to meet resistance in the 1.1360 region amidst the current short-term neutral/bearish bias.

Key Quotes

“Eurozone CPI rose to +2.2% in Oct, up from 2.1% in Sep, with core CPI rising two tenths to 1.1% Y/Y. The data were in line with slightly firmer German data yesterday and consensus expectations. German Retail Sales rose 0.1% M/M in Sep but fell 2.6% in the year. Italian Economy Minister Tria said there will be no growth without stimulus while ECB’s Visco countered that Italy cannot narrow the growth gap with fiscal stimulus. Bund/BTP spreads are fractionally wider this morning but the yield differential remains broadly stable – for now, at least – around the 300bps level. ECB’s Nowotny remarked that events in Italy will not “massively impact” the Eurozone and that the he expects the central bank to confirm the end of asset purchases in Dec”.

“EURUSD retains a soft undertone but price action is hardly dynamic and spot continues to draw some modest support in the low 1.13s, near last week’s low and a little ahead still of the Aug low just above 1.13. Short-term trend signals are bearish, but hardly strong at this stage, suggesting steady, if weak, pressure on the market to extend the recent run lower. Equally, however, the slack DMI signals on the intraday studies suggest that the bar to a bounce in the EUR from here is not especially high. We see short-term trend resistance at 1.1360”.