Fade gains in EUR/USD – Scotiabank

Shaun Osborne, Chief FX Strategist at Scotiabank, recommended selling occasional bouts of strength in the pair in the short term.

Key Quotes

“ECB President Draghi’s comments to the Dutch parliament yesterday also conceded that downside risks had abated but stressed that it was too soon to consider an adjustment to monetary easing. We think market talk of the ECB adjusting its forward guidance in Jun is premature and feel that Sep is more likely, effectively acknowledging the end to the current AP programme. EURUSD is little changed on the day but still looks vulnerable to a further retreat following Sunday’s French elections”.

“Short-term patterns are flattish for spot after the EUR tested the 1.0850 support zone yesterday – but failed to make much impression on the base of the trading range in place since late April. Longer-term price signals are negative and a low weekly close this week will add to corrective pressure on the market, we expect. Near-term though, the 1.0850/1.0900 range may persist. We prefer to look to fade EURUSD gains”.