FX Strategists at Scotiabank noted the pair’s outlook still leans towards the bias side.
Key Quotes
“EUR is quietly consolidating within a remarkably tight range around the psychologically important 1.16 level. Fundamental releases have been limited to weaker than expected industrial production data from Spain, offset by an improvement in sentiment on the back of reassuring comments Italian PM Conte. BTPs are extending their recovery for a fourth consecutive session and the Italy-Germany 10Y spread is now 10bpts off of last Friday’s extended levels. Measures of sentiment appear to be diverging as risk reversals show a slight moderation in the (relatively) sizeable premium for protection against weakness vs. the USD. EURJPY risk reversals remain heavy”.
“EURUSD is consolidating within a remarkably tight range around the psychologically important 1.16 level. Trend and momentum indicators are close to neutral, reflecting the near-three month range with movement roughly bound between 1.1500 and 1.1850. Near-term resistance has been observed around 1.1620. We remain cautious below the 50 day MA (1.1669)”.
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