EUR/USD still fundamentally bearish - Scotiabank

Shaun Osborne, Strategist at Scotiabank, notes that they remain fundamentally bearish on EUR/USD.

Key Quotes

“EURUSD continues to nudge up. Eurozone PMI data from the manufacturing sector were mixed; Italian data disappointed, French numbers were revised up from the preliminary report while German numbers were revised down a tenth to 55.0 for October. The aggregate Eurozone report was revised up 0.2 to 53.5 from the preliminary data.”

“Eurozone-US spreads remain stuck around 146 bps at the 2Y sector of the curve, suggesting EURUSD gains may struggle to extend. We remain fundamentally bearish.”

“EURUSD short-term technicals: neutral/positive – We continue to characterize short-term trends and neutral/positive only as the technical picture suggests the current rebound in spot is corrective in nature only. Primary, secondary and minor technical trends remain firmly and clearly negative. We noted earlier in the week that corrective gains could extend towards the mid 1.10/mid 1.11 range.”

“Short-term price action suggests the EUR rally has stumbled just ahead of 1.11 overnight, it would appear. Short-term price signals (hourly “shooting star”) have turned negative and we note a raft of important technical resistance points lie ahead of the market through the low 1.11 area. We continue to favour selling EUR rallies.”