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FX Strategists at Scotiabank noted the pair keeps the bearish side in the near term and faces a continuation of the choppy trade and narrow ranges.

Key Quotes

“Italy’s populist government has conceded some ground to the EU, it would appear, by agreeing to target lower budget deficit/GDP ratios after next year. Press reports broke the news overnight, prompting a short squeeze in the EUR to near 1.16 before the EUR eased back again. Slightly disappointing final Eurozone PMI data – German figures were revised lower, French data were revised higher leaving the composite Eurozone number a tenth off the preliminary report at 54.1 – helped nudge the EUR off the high. Choppy trading suggests that short-term positioning continues to dominate near-term trends amid shallow market conviction”.

EURUSD squeezed higher in overnight trading, having stabilized above 1.15 yesterday. The rebound eases immediate pressure on the EUR but does little to alter the soft undertone on the charts that developed after last week’s sharp slide (bearish outside range week). Trend signals are tilting negatively for the EUR on the intraday and daily studies but are not aligned in a manner that provides for a high-conviction, directional call at this point. We rather look for narrow and choppy range trading to extend a little longer. We see support at 1.1500/05 and resistance at 1.1600/20″.