EUR/USD: broader EUR bearishness has not diminished and technically bearish below 1.0900

Currently, EUR/USD is trading at 1.0848, up 1.13% on the day, having posted a daily high at 1.0921 and low at 1.0821.

While broader EUR bearishness has not diminished significantly in the longer run, EUR/USD rallied hard at the open this week on the back of the French election with a Macron win more or less fully priced now. However, 1.09 is proving a tough level of resistance and the market prefers to sit on hands awaiting further developments from the ECB to US data. 

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"ECB policy makers will doubtless be happy that Frexit talk has been doused by the election result but we suspect that President Draghi will take the opportunity to push back a little more against the idea that policy easing could be dialled back sooner rather than later," explained analysts at Scotiabank.

EUR/USD levels

Short term, analysts at Scotiabank are bearish. "Despite the sharp rally in spot, and the EUR gapping above the 200-day MA (1.0838) over the weekend, we take a bearish view of the technical picture here still because the gain in the market has stalled at a major technical resistance around 1.09."

The analysts explained that this point marks the initial low seen in June’s sell-off, close to the early Dec high and the peak seen in late Mar. "Support is a little vague intraday between 1.0780/1.0820 but we think the market is likely to test support in the next day or so at least. We favour selling rallies."