Euro: Bullish trend eyes upper 1.17s against US Dollar – Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret report that EUR/USD gains are being driven mainly by broad US Dollar (USD) weakness, with front-end spreads narrowing since late June and supporting Euro (EUR) fundamentals. Short-term technicals are described as bullish, with a clear break above 1.1625/50 reinforcing prospects for a push into the mid-to-upper 1.17s, and key resistance seen near the 1.1793 retracement level.

Euro advance supported by narrowing spreads

"Solid gains in the EUR this week largely reflect a broadly lower USD. Front-end spreads have narrowed considerably since the end of June, supporting the fundamental improvement in the EUR in recent weeks."

"But that is not the story of the past 24 hours as investors react negatively to US policy decisions. German PPI rose a stronger than expected 1.1% in July."

"Bullish—EUR secured a clear extension through the 1.1625/50 zone which has strengthened the prospect of gains pushing on to the mid/upper-1.17s in the short run."

"The 61.8% retracement of the EUR H1 decline sits at 1.1793. Trend dynamics are EUR-bullish. Support is 1.1600/25."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)