EUR/USD is capped at the 1.0900 area ahead of the ECB meeting. Scotiabank economists analyze the pair's outlook.
The session is likely to be characterized by a greater degree of fluctuation
The session is likely to remain in a fluctuation zone, with the euro even more attractive to sell on small rallies, as short-term spreads between the eurozone and the US widen a bit again.
On the spot, trends appear flat on the short-term chart, with the Euro limited in the 1.0900 area, but well supported near 1.0850 (200-DMA at 1.0848). However, the euro's technical backdrop remains weak, with the euro holding on to last week's break of uptrend support (now resistance) at 1.0955/1.0960.
Further corrective losses in the euro are likely in the coming weeks, to further undo the fourth quarter dollar sell-off.
A daily close below 1.0875 points to a pullback to 1.0700/1.0800.
Source: Fx Street
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