EUR/USD continued its decline below 1.10, but the underlying tone of the EUR appears soft, notes Shaun Osborne, Chief FX Strategist at Scotiabank.
Dovish ECB, weak tech point to weakness
“EUR/USD losses have stabilized below 1.10, but the underlying tone of the EUR appears soft amid a sharp widening in EZ/US spreads (by around 40 bps for 2-year bonds) since mid- September amid weak activity in the Eurozone and slowing inflation. ECB Vice President Villeroy said the central bank will ‘very likely’ cut rates again this month.”
“The EUR is likely to remain soft ahead of the ECB decision on the 17th. EUR/USD losses have slowed around the 1.0950 point and the near-term price action suggests that a possible ( minor) minimum.”
“Still, the broader technical picture suggests that, after repeated failures around the 1.12 area in recent weeks, the loss of support at the 1.10 point (the low between testing 1.12 and now resistance) has triggered a effective double top pointing to losses extending to the 1.08 area in the next 1-2 months.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
