EUR/USD still neutral/bearish near term – Scotiabank

Shaun Osborne, Chief FX Strategist at Scotiabank, sees pullbacks in spot should stay contained in the 1.1770/75 band in the near term.

Key Quotes

“The broader undertone of the manufacturing sector remains healthy, however, and Eurozone Q2 GDP rose 0.6% Q/Q (+2.1% Y/Y, middle chart – similar to the US rate of growth), up from +0.5% in Q1, suggesting the broader undertone in the economy is improving. Positive activity data will bolster expectations that the ECB will move to reduce extra-ordinary support for the Eurozone economy later this year”.

“There is no quibble with the broader bull trend in EURUSD from a technical point of view but the short-term pattern of trade looks a little softer and suggests intraday risks are perhaps tilted towards a retest of the upper 1.17s. We see firm support on dips and expect EUR weakness to remain limited to the 1.17 area. We see support at 1.1770/75”.