Analysts at Scotiabank explained that EUR is strong and extended its recent bullish reversal to reach a fresh three week high above 1.1800.
Key Quotes:
“The outlook for relative central bank policy is providing support as market participants firm ECB rate expectations for 2019.”
“German-U.S. yield spreads are narrowing from their extended/record levels and Bund spreads are narrowing in response to Italian PM Conte’s pledge to reduce the country’s debt.”
“Sentiment is clearly dominating as market participants ignore much weaker than expected factory orders data out of Germany and softer than expected final GDP figures for the euro area.”
“Risk reversals suggest a continued unwind in the premium for protection against EUR weakness vs. both the USD and JPY.”
“We look to an extension of EUR gains toward the early May closing low around 1.1850 and note the 38.2% retracement of the 2018 decline at 1.1909. Near-term support is expected between 1.1780 and 1.1750.”
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