EUR/USD stance moves to neutral – Scotiabank

According to FX Strategists at UOB Group, the pair’s near term outlook stays bullish/neutral.

Key Quotes

“Italian budget negotiations are in focus as market participants assess the risk of a delay to the 2019 budget plan, given conflicting reports on planned deficit targets. 10Y BTP yields are up 5bpts on the day. ECB rate expectations remain steady and German-U.S. yield spreads have narrowed from their extended levels. Measures of implied volatility are rising and lifting the premium for protection against EUR weakness”.

“Bullish momentum indicators are fading to neutral and the DMI’s are converging. EUR appears to have found near-term support in the 1.1680-1.1700 area and we would anticipate additional support at 1.1650. We continue to highlight the importance of the 1.1780 level representing the first major retracement (38.2%) of the 2018 decline”.