EUR/USD bid on short covering and bears are nervous – Scotiabank

EUR/USD has been  climbing off the overnight low in the upper 1.14s on short-covering and analysts at Scotiabank note  that the broader range in place since Jun remains intact essentially and suggest that investors appear – at this point – to have little appetite to push spot much below the rough mid-point of the sideways trading band.  

Key Quotes:

“Rising US yields are USD-supportive but the EUR has been living with a significant yield disadvantage versus the USD for some time without ever really fully reflecting the scale of spreads across the curve. We see wide spreads more as an impediment to the EUR advancing significantly.”

“EUR/USD short-term technicals: neutral/bullish – EURUSD has picked up a little more support in European trading and short-term price signals suggest that a minor low may be trying to form from the upper 1.14s (bullish “morning star” signal on the 6-hour chart).”

“Spot will have to maintain gains or extend more through early Nth American trade and to give the formation any chance of developing, however. We spot minor resistance at 1.1510 and feel a push through 1.1525/30 will give the bounce an opportunity to extend towards the mid/upper 1.15s.”